If you are hunting for investment gems, Warren Buffett's Berkshire Hathaway (NYSE: BRK.B)(NYSE: BRK.A) is an excellent place to start. The legendary investor has built a powerhouse portfolio over decades, stacking up some of the best-performing stocks in history.

One of his latest buys, Domino’s Pizza (NASDAQ: DPZ), is proving to be a rewarding pick, not just in terms of share price appreciation but also in terms of dividend growth.

However, this fast-growing pizza giant is not just delivering hot pies. It is serving up hefty dividend increases year after year. Investors looking for reliable income growth should take a serious look at this Buffett-backed stock.

Domino’s Pizza Is Buffett’s New Pick

Buffett’s portfolio is not just about blue-chip stalwarts like Apple and Coca-Cola. Berkshire Hathaway occasionally adds fresh names, and Domino’s Pizza is one of the latest to make the cut.

Cotton Bro / Pexels / In the third quarter of 2024, Berkshire quietly bought a $549 million stake in the pizza delivery leader. And it is turning out to be a fruitful portfolio.

While it is unclear if Buffett himself pulled the trigger on this buy, one thing is certain: Domino’s is a strong business with a track record of rewarding shareholders. The company has spent years perfecting its operations, creating a dominant global presence, and, most importantly, sharing its success through dividends.

The Stocks Has A Dividend Growth Story Worth Watching

Domino’s doesn’t just pay a dividend. It aggressively grows it. The company announced a massive 25% dividend hike in early 2024, extending its streak of annual double-digit increases that dates back to 2014.

That is an impressive track record for any stock, let alone a fast-food chain.

The timing couldn’t be better for investors. The next dividend increase is likely right around the corner, as Domino’s historically announces hikes in February. With consistent earnings growth and a solid balance sheet, another boost seems inevitable.

Shareholders who get in now could be locking in even higher payouts in the near future.

Strong Shareholder Returns Beyond Dividends

Dividends are not the only way Domino’s is rewarding investors. The company is also aggressive with share buybacks. In Q3 2024 alone, it repurchased $190 million worth of its own stock, signaling confidence in its long-term growth.

This matters because buybacks reduce the number of shares outstanding, effectively increasing the value of each remaining share. It is another way the company ensures long-term investors see their wealth grow.

Buffett’s Signature Strategy in Action

Tuan / Between rising dividends and buybacks, Domino’s is giving shareholders multiple reasons to stick around.

One of Buffett’s golden rules is investing in companies with strong brands, pricing power, and reliable cash flow. Domino’s checks all those boxes. It is the world’s largest pizza delivery company, with over 20,000 stores worldwide. The brand’s digital dominance, fast delivery network, and cost-efficient model give it an edge over competitors.

Beyond its consumer appeal, Domino’s operates with an asset-light business model, relying on franchisees to expand its footprint while keeping corporate costs low. This allows it to generate solid profit margins, which in turn fuels dividend growth.

It is exactly the type of business Buffett loves. One that compounds wealth over time.

Is Domino’s Still a Buy?

Investors might wonder if they have missed the boat on Domino’s. After all, it has already delivered impressive returns. But there is plenty of room for growth.

The stock’s current dividend yield of 1.3% may not seem high. But with double-digit payout growth, that yield can rise quickly for long-term holders. Plus, Domino’s ongoing expansion into new markets, combined with continued buybacks, means shareholders can expect increasing value over time.