This Warren Buffett favorite just hiked its dividend by 15%

Warren Buffett'sBerkshire Hathaway owns nearly 10% of Domino's Pizza, a stake worth roughly $1.34 billion. In fact, Berkshire raised its stake in the pizza company by 12% in Q4 of 2025. When one of the most closely watched investors in the world has that kind of skin in the game, a quarterly earnings report tends to draw a crowd.Valued at a market cap of $13.4 billion, Domino's (DPZ) stock surged 4.1% on Feb. 23. The catalyst? A strong fourth-quarter earnings report and a dividend hike that few income investors would want to miss.Domino's raises its quarterly dividend Domino's bumped its quarterly dividend by 15%, bringing the new payout to $1.99 per share. The record date is March 13, with payment set for March 30. Domino's continues to grow its dividendImage source: Shutterstock That's not a small move for a consumer brand operating in what most people would call a "boring" business. But Domino's has quietly become one of the steadiest dividend-growth stories in the restaurant sector.For instance, its quarterly dividend was much lower at $0.20 per share in 2013.

More Dividend Stocks:Qualcomm issues urgent dividend alert for chip investorsJim Simons’ Renaissance lowers stake by $700M in hot dividend stock84-year-old Dividend King tops $1 trillion valuation milestoneAnalysts tracking the Warren Buffett stock expect free cash flow to increase to $810 million in 2030 from $673 million in 2026. Given an annualized payout of $7.96 per share, the dividend expense is approximately $269 million, indicating a payout ratio of less than 50%. A snapshot of key dividend metrics for DPZ stock:Quarterly dividend: $1.99 per share (up from prior payout)Annualized dividend: $7.96 per shareDividend yield: Approximately 2.0% Dividend growth: 15% increase announced Feb. 23, 202610-year dividend growth (CAGR): 18.1%Record date: March 13, 2026Payment date: March 30, 2026For income-focused investors, the combination of a growing dividend and Berkshire's large position gives DPZ added credibility as a long-term hold.Domino's Q4 results beat expectationsThe numbers behind the dividend hike tell their own story.Domino's posted a 4.9% jump in fourth-quarter revenue to $6.3 billion, according to a company statement. U.S. same-store sales rose 3.7%, topping the 3.47% consensus estimate. That beat came even as the broader restaurant industry has struggled with cautious consumers watching their spending.How did Domino's pull it off? Two things drove the quarter. First, the $9.99 "Best Deal Ever" promotion drew in value-seeking customers without gutting margins. Second, the Parmesan-stuffed-crust pizza attracted new customers and raised average ticket prices.CEO Russell Weiner stated:For the full year 2025, U.S. same-store sales grew 3%. The carryout business, which now stands at roughly $4.4 billion annually, grew by 5.6%. That's larger than the total revenue of two of Domino's national pizza competitors.Operating income grew 8.1% for the year. Average franchisee profitability climbed to approximately $166,000 per store, up $4,000 from the prior year. Those are the kinds of numbers that attract long-term institutional investors and keep Berkshire holding.What DPZ stock investors should watch nextNot everything in the report was spotless.International same-store sales rose only 0.7% in the fourth quarter. Results from Domino's Pizza Enterprises (DPE), the company's master franchisee for Australia and several other markets, dragged on the overall international number. Excluding DPE, international performance was tracking much more closely with the company's long-term goals.The company recently hired a new CEO for DPE and described getting that business back on track as a top priority.Related: Buffett’s Berkshire mixes a newspaper bet with a favorite pizza chainThe key variable going forward is DoorDash. Domino's wasn't fully rolled out on the platform until mid-2025, meaning the full-year benefit didn't show up in the numbers yet. Management expects that to change in 2026.Rising insurance and labor costs also squeezed margins at company-owned stores. However, Chief Financial Officer Sandeep Reddy noted that franchisee economics, a far larger piece of the business, held up well.CEO Russell Weiner framed Domino's long-term opportunity in stark terms on the earnings call. The No. 1 pizza chain in the world currently holds about 23% of the U.S. pizza market. Other category leaders in quick-service restaurants typically command 40% to 50%. Weiner's stated goal: double U.S. retail sales from roughly $10 billion over time.For 2026, the company is guiding for 3% U.S. same-store sales growth, 175-plus net new domestic stores, and operating income growth of roughly 8%. Pricing is expected to remain flat to low single digits—a deliberate choice to protect volume and franchisee profits rather than chase short-term margin gains through price increases.With Buffett's Berkshire still firmly in the corner booth, the investment case for DPZ looks intact. Wall Street remains bullish and expects DPZ stock to surge 16% from current levels, given consensus price targets. Related: Popular pizza dining chain closing 100s of restaurants nationwide