FTSE 250 inventory Domino’s Pizza (LSE: DOM) doesn’t get a lot consideration from traders. I discover that stunning. Over the long run, this firm’s generated unbelievable returns for shareholders. Right here’s a have a look at how a lot I’d have at the moment if I’d purchased £2k value of shares for my portfolio 20 years in the past.

14-fold share price return

Again in September 2004, shares in Domino’s have been altering arms for about 21p (this implies I’d have gotten about 9,500 shares for £2k). At this time nonetheless, they’re buying and selling for 290p.

That’s practically a 14-fold return. If I’d invested £2k, I’d now have about £27,600. That’s fairly spectacular.

For reference, the FTSE 100 index has solely risen about 80% over that interval, which means it hasn’t even doubled.

Dividends on prime

Nevertheless it will get higher. You see, over the past 20 years, Domino’s has paid dividends to traders the entire time. I calculate it’s paid about 114p per share in dividends over the interval. So if I’d owned 9,500 shares for 20 years, I’d have picked up roughly £10,800 in divis (over 5 instances my preliminary funding!)

Turning £2k into practically £40k

Add that determine to the £27,600 and now we have a complete of £38,400. That’s a phenomenal outcome. Certainly, the form of return you’d count on from a high-growth tech inventory, not an organization promoting pizzas.

If solely I’d had a nibble right here again in 2004, as a substitute of speculating on small-cap miners and oil shares (I lacked expertise within the markets again then).

A high-quality enterprise

Now, in hindsight, I’m truly not shocked this firm has generated such fabulous long-term returns for traders.

Domino’s Pizza, it has:

• A well-known, trusted model
• Merchandise that individuals have a tendency to purchase frequently (in financial downturns folks typically keep at house and order pizza as a substitute of going out)
• A really excessive degree of profitability (return on capital has averaged 30% over the past 5 years which is excellent)
• A superb dividend development monitor file

Total, it’s a high-quality enterprise. And high-quality companies are likely to ship enticing returns for his or her traders (which is why my funding technique at the moment focuses on high quality shares).

Value shopping for at the moment?

Now, there are not any ensures the shares will proceed to outperform, after all. One danger going ahead is market saturation. Trying forward, the corporate could not be capable of broaden on the identical fee that it has prior to now.

One other danger is altering shopper preferences. At this time, wholesome meals’s rising in popularity and Domino’s Pizza isn’t precisely the healthiest meal.

At at the moment’s price nonetheless, I feel the shares are value contemplating. At the moment, they’re effectively off their highs (roughly 35% beneath) and commerce on a really cheap price-to-earnings (P/E) ratio of 14.6.

In the meantime, the dividend yield’s a wholesome 3.8%. At that earnings a number of and yield, I feel the shares are trying tasty sufficient to think about.