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🦅 Top Dividend Growth Focused Eagles of the Week

Each week we spotlight companies accelerating their dividend growth — reliable names built to push your passive income higher, faster, year after year.

Intro

This series is about dividend growth first. Here we focus on companies where dividend income is already meaningful today - but the real story is how fast that income can grow over time.

These are businesses with the financial strength, earnings momentum, and capital discipline to raise dividends aggressively and consistently. Income grows first. Capital follows.

This is the part of the portfolio designed to accelerate future cash flow — so your dividend income doesn’t just grow… it compounds at speed.

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Handpicked dividend ideas from the MaxDividends team, backed by proprietary research and delivered daily.

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• First, of course, because of the company we’re about to analyze. It’s the star of today’s report.

• Second, I’d like to introduce you to someone I think you’ll really enjoy following—Dave.

You already know how much I love dividend investing. Our little team of dividend geeks is something special... but apparently we’re not the only ones on this planet. 😂

I spend a lot of time following what’s happening across the dividend investing community. I read different newsletters, research, and investment blogs, and not long ago I came across Dave’s work.

The more I read, the more I liked his approach. Dave does a fantastic job explaining what long-term dividend investing is really about - from the fundamentals and first steps to building a portfolio of truly high-quality dividend businesses. I genuinely like what he’s building, and I think many of you will too.

A few weeks ago, Dave and I had a long conversation, and somewhere along the way, a simple idea came up.

Max: Dave, what do you think about writing a research report together? Let’s pick one company that meets both your framework and the MaxDividends framework. I think that could be really interesting.

Dave: I love that idea. Let’s do it!

Well... here it is.

Today’s report is the result of that collaboration—a complete research report on a company that successfully passed two independent quality frameworks and earned its place on both of our watchlists.

Consider this our complimentary joint Dividend Research Report. Enjoy!

The headline wasn’t lying. We deliberately picked a company that’s a little outside today’s market hype. But that’s often where the most interesting long-term opportunities are found.

Our shortlist started with 15 companies. Then we narrowed it down to 6. Then 3. And in the end, we both landed on the same business. Well... partly because we both happen to love pizza.

Dave will kick things off by walking through his framework and explaining why Domino’s earned a place on his list.

Then I’ll walk you through the company using the MaxDividends framework and show you how I reached the same conclusion from a different angle.

Dave—take it away.

Dave Analysis

Most think Domino’s ($DPZ) sells pizza, and they are not wrong. But the business model revolves around franchises and the pizza (while great) drives growth.

The company sells around $20 billion in pizza, but records revenues of $5 billion+.

That gap is the whole business, so let’s start there.

🟢 Business Quality

Domino’s does not sell pizza. It franchises pizza, and it supplies pizza.

The franchise model works like this: the company owns 186 stores, with franchises of 22,531. The franchisees put their own money up to build the stores and collect all the money from sales. They pay Domino’s a 5.5% royalty, while the franchisees buy their dough, cheese, and boxes through the 22 US supply chain centers.

Here’s where FY2025 profit came from:

• US stores: $1,611.8M revenue, $575.3M segment income (48.6% of profit)

• Supply chain: $2,989.5M revenue, $320.1M segment income (27.0% of profit)

• International franchise: $338.7M revenue, $288.5M segment income (24.4% of profit)

The international line is the standout. It throws off 6.9% of revenue and a quarter of the profit at an 85% margin, because a royalty check costs almost nothing to collect.

And this detail from the 10-k is interesting. Domino’s hands its franchisees 50% of the pre-tax profit from the supply chain centers. Franchisees are not obligated to buy from Domino’s, but the vast majority do because they own half the upside.

That is a supplier relationship almost nobody else in franchising has and is part of the genius of the model.

FY2025 free cash flow was $671.5M, up 31% from $512.0M.

One warning before you screen this company. Return on Equity will look like crap because of 20 years of borrowing to buy back stock. The ROE screeners will show negative $3.98B in shareholders’ equity.

Do the calculations by hand; with around $745M of after-tax operating profit on about $590 of net operating capital, we see a better ROE. All because the stores are funded by someone else.

🏰 The Moat

The moat protecting the business revolves around three things. And one of gets stronger every year.

1. The advertising fund. US franchisees pay 6% of sales for a national ad fund, collecting $559.5M in 2025, up 9.7%. By comparison, Pizza Hut’s is under $5B and shrank 8.2% last year, and Papa John’s is around $3.7B and falling. Those companies’ ad funds are a cut of the system sales, so the marketing budgets shrink while Domino’s grows.

2. The supply chain. Margins grew from 9.04% in 2023 to 10.71% in 2025. That expansion is what pays for the $9.99 promotions without crushing franchisee profit.

3. The loyalty program. 37.3 million active members. The 2023 relaunch dropped the earning threshold to $5 to grab carryout customers, and carryout comps ran +6.5% in Q4 2025 against delivery at +1.6%.

Moats don’t go from strength to strength; we have to look for chinks too.

The US QSR pizza category shrank about 0.3% in 2025 while Domino’s US retail sales grew 4.8%. So the outperformance is share taken from Pizza Hut and Papa John’s. The downside to this, share taken from shrinking competitors, is a finite resource.

Domino’s also spent twenty years teaching pizza delivery meant its own app and its own drivers, then joined Uber Eats and DoorDash. The store economics survive that, because Domino’s charges more on the apps and still drives every order itself. What does not survive is owning the screen where the customer decides.

The first half of 2026 showed the strain:

• Q1 2026 US same-store sales: +0.9%

• Q2 2026 US same-store sales: +0.1%

• Q2 2026 delivery comps: −0.7%

CEO Russell Weiner blamed a premium pizza launch whose “messaging wasn’t compelling enough.” Joe Jordan takes over as CEO on October 1.

I score the moat as wide and durable. I also think the growth runway is shorter than the “Hungry for MORE” plan advertises.

🛡️ Dividend Safety

Dividend Safety Score: 3.9 / 5 (Healthy)

• Free cash flow payout: 35%

• Earnings payout: 39%

• Interest coverage: 4.9x

• Return on invested capital: 51%

• Dividend growth streak: 12 years

• Five-year dividend CAGR: +17.4%

The payout is the easy part. Domino’s paid $236.9M in dividends out of $671.5M of free cash flow in FY2025 and still had room for $357.7M of buybacks on top.

The debt is what holds this at 3.9 and keeps it from scoring higher. Domino’s carries $4.88 billion of notes against $165M of cash, at 4.3x leverage.

None of that threatens the dividend. A 35% free cash flow payout covers it easily. But pay attention to the debt and interest coverage, for any sign of trouble.

💲 Valuation

At $347.44, Domino’s trades near its cheapest valuation of the past ten years.

• P/E: 19.7x (five-year average 26.5x)

• Price to free cash flow: 17.6x (five-year average 26.7x)

• Free cash flow yield: 5.69% (five-year average 3.91%)

Since 2021, Dominos has grown earnings 29%, while the share price dropped 35%, indicating multiple compression with no business decline.

Using a reverse DCF, and following inputs:

• TTM free cash flow of $653.4M

• Discount rate of 9%

• Terminal growth rate of 3%

The current market cap of $11.5B implies 3.3% annual free cash flow growth for the next decade.

The market is pricing Domino’s for around inflation. When you consider Domino’s has compounded free cash flow at 8% a year since 2019, and the company’s guidance calls for 8% operating income growth, it looks like a mispricing to me.

One honest caveat. My 9% discount rate is a choice (roughly around the WACC or the company’s cost of capital), and at 8% the implied growth drops to 1.0% while at 10% it rises to 5.4%.

✅ My Verdict

Buy, with the 2027 refinancing on the watch list.

Plus side:

• 99% franchised stores

• 85% international margins on royalties

• Supply chain that shares profits with franchisees

• 11 years of share gains

• FCF growth of 11% in 2025.

What changed is the price, and the reverse DCF says the market now wants 3.3% growth out of a business delivering double that.

Two things I’m watching:

• US comps recover above 2%

• Whether Joe Jordan resets the 2028 targets when he takes over.

I own this great company and will continue to add on weakness.

*Numbers from Domino’s FY2025 10-K and Q2 2026 results. Price as of the July 31, 2026 close.

Max Analysis

How I Analyze Dividend Stocks

For today’s analysis, I’m using the MaxDividends Income System inside the MaxDividends Research Platform - the same framework I use every week to evaluate every company before adding it to my portfolio.

🟢 Business Quality

Every company first has to prove it’s a great business before I even look at the dividend. The Business Quality Score is built around five core areas:

• 📈 Consistent sales growth

• 💰 Growing profits

• 🏦 Strong net income

• 💵 Healthy dividend coverage

• ⚖️ Conservative debt levels

✅ DPZ Business Quality Score: 97/99 — Very Safe

Domino’s scores 97 out of 99, placing it firmly in the Very Safe category.

🛡️ Dividend Safety

A great business doesn’t automatically make a great dividend stock. Our Dividend Safety Score combines four key factors:

• Business Quality

• Dividend policy and consistency

• Payout sustainability

• Long-term dividend growth

✅ DPZ Dividend Safety Score: 97/99 — Very Safe

Domino’s scores 97/99, giving me confidence that today’s dividend remains well supported by the business.

💲 Valuation

That conclusion comes from two independent checks:

• Value vs. Peers — compares Domino’s profitability with other companies in the industry.

• Value vs. History — compares today’s valuation with the company’s own long-term average.

Together, they suggest the stock is trading around a reasonable valuation rather than at an extreme premium or discount.

✅ DPZ - Fairly Valued.

Today, the MaxDividends Research Platform rates Domino’s as Fairly Valued.

Two More Things I Personally Look For

Beyond the platform scores, there are two filters I rarely compromise on.

1. A long history of dividend growth

Domino’s has paid dividends for 13 years and has increased its dividend every single year since initiating it. That’s exactly the type of consistency I want in a long-term income portfolio.

2. MaxRatio 10+

MaxRatio is a proprietary MaxDividends metric designed to identify companies with strong long-term dividend income potential.

It combines:

• current dividend yield;

• dividend growth over the past 3, 5, and 10 years;

• Business Quality Score;

• Dividend Safety Score.

Higher MaxRatio companies have historically shown the strongest combination of dividend growth and business quality.

Domino’s comfortably meets that requirement.

Final Verdict

🟢 Max’s Consensus: PLAYING

Every company in the MaxDividends Research Platform falls into one of three categories:

• 🟢 Playing — high-quality businesses worth actively considering.

• 🟡 Watching — strong companies, but waiting for a better opportunity.

• 🔴 Skip — companies that don’t currently meet our quality standards.

Domino’s Pizza earns a clear Playing rating.

Bottom Line

We hope you found this idea as interesting as we did.

But no matter which framework you use—or what decision you ultimately make—always put your own goals first. Take your time, do the work, and invest with care.

Our shared goal is simple: build a growing stream of dividend income that can become a dependable source of financial independence, help cover everyday expenses, and eventually give you the freedom to live on your own terms.

Whether you’re just getting started or already well on your way, Dave and I sincerely hope you keep moving forward.

May the dividends pay the bills!

— Dave & Max
Founders, Dividend School | MaxDividends

Handpicked dividend ideas from the MaxDividends team, backed by proprietary research and delivered daily.

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🦅 Top Dividend Growth Focused Eagles of the Week

Each week we spotlight companies accelerating their dividend growth — reliable names built to push your passive income higher, faster, year after year.

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🎓 Cummins Inc (CMI)

Hey — Max here 💪

Before we dive in, let me say a few words.

What you’re about to read is drawn from our Premium research — the most in‑depth level of our work, where we move beyond surface‑level ratios and walk through the full framework: how to identify resilient dividend franchises, how to spot the characteristics of future Dividend Aristocrats and Kings, and how to build an income stream designed to compound across decades.

This is a disciplined approach refined through multiple economic cycles and translated into practical insights you can apply in real portfolios. And now, that same framework is available to you.

In upcoming editions, we’ll continue to highlight select dividend opportunities and high‑quality enterprises — businesses that may not dominate headlines today, but could evolve into tomorrow’s core blue‑chip holdings and long‑term dividend compounders.

The advantage is straightforward: you gain perspective early. You can evaluate these companies before they become consensus favorites, understand their structural strengths ahead of the crowd, and — with disciplined valuation and patience — position yourself before the broader market fully prices in their durability.

When investors think about the engines powering global commerce — from heavy‑duty trucks and construction equipment to power generation systems and critical infrastructure — Cummins Inc. stands out as a company synonymous with engineering excellence, mission‑critical power solutions, and a diversified operating base built around essential industrial demand. Its portfolio spans diesel and natural gas engines, power systems, components, and an expanding presence in electrified and alternative power technologies, serving customers across transportation, industrial, and energy markets worldwide.

It is also a long‑established dividend payer — supported by a business model tied to indispensable equipment platforms, a global service network that generates recurring revenue, and a capital allocation discipline that has consistently prioritized shareholder returns through varying economic environments.

In this Deep Dive, Cummins goes through the MaxDividends Five‑Pillar Formula — the same structured framework we use to evaluate whether a business can sustain and grow its dividend through recessions, cyclical end‑markets, technological transitions, and periods of uneven global growth.

👉 Let’s break it down — step by step.

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It owns one of the most recognizable pieces of real estate in American sports, and it has systematically turned that brand into a diversified gaming and entertainment empire spanning live racing, historical racing machines, regional casinos, and wagering technology.

In 2025 it delivered record net revenue and record Adjusted EBITDA for the second consecutive year, with the crown jewel producing the highest TV ratings for its flagship event in nearly 40 years.

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When investors think about banks, they often focus on the largest national institutions. But few businesses can point to a model that has worked for more than 120 years, surviving the Great Depression, multiple financial crises, and countless interest rate cycles along the way.

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These stocks are undervalued. By investing in strong, undervalued companies that frequently increase their dividend rates, we benefit from dividend compounding and strong price performance—getting great businesses at a discount.

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Welcome to this month’s Undervalued Dividend Short-List.

This is not a random collection of stocks. This is a rare moment where some of the best dividend businesses in the world are trading at prices the market won’t offer for long. You are not here to guess. You are here to build income.

With the MaxDividends Income System, you are not just buying companies — you are using a proven way to see which great businesses are mispriced, which are strong enough to survive any market cycle, and which are positioned to grow their dividends for years to come. You know what you own, why you own it, and what to do next.

That’s the difference between hoping and having control. You have a roadmap. You have real data. You have a system and the technology behind it.

This month’s list brings you a powerful triple-edge: great businesses, selling at a discount, with real dividend growth ahead — all filtered through the same system used to build long-term, dependable income.

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