Papa John’s 10% Dividend Yield Is Misleading. Here’s How Domino’s Compares
One pizza chain flashes a near double-digit dividend yield that no longer exists, while the other quietly raises its payout every year. Knowing which number to trust could be the difference between steady retirement income and a dividend trap.
Papa John’s (NASDAQ:PZZA) or Domino’s Pizza (NASDAQ:DPZ | DPZ Price Prediction): which is the higher-income pick right now for retirement savings? Papa John’s shows a headline yield near 9.9%. That figure comes from a dividend the board has already suspended. The board announced the cut with second-quarter results on August 6, 2026, and the stock has since fallen to $18.52. That price is 50.57% lower than where it started the year.
First, a quick overview of how both companies make money. Independent owners run most of the stores. Corporate collects royalties and fees from them and also sells them dough, cheese, and supplies through a company-run supply chain. Domino’s runs this model across more than 22,700 stores, and franchisees own 99% of them. Papa John’s has about 5,978 restaurants.
Dividend Income: Domino’s Wins Outright
Papa John’s paid $1.84 per share a year on trailing diluted EPS of $0.82. That works out to a payout ratio of about 224%. In the first half of 2026, the company paid $30.9 million in dividends and generated just $9 million of free cash flow. The quarterly payout had stayed flat at $0.46 since August 2023. The last ex-dividend date was May 18, 2026. Chief Executive Todd Penegor said the board would suspend the dividend “to make the investments that we believe are needed to deliver on our strategic transformation.”
Domino’s pays $1.99 per share per quarter, or $7.96 per year. At $306.62, that is a yield of about 2.6%. Trailing payments of $7.71 use about 44% of fiscal 2025 EPS of $17.57. Free cash flow that year reached $671.5 million. The payout has grown every year from $0.20 a quarter in 2013, including a 15% raise in early 2026.
Business Momentum: Papa John’s Keeps Losing Ground
Papa John’s North American comparable sales fell 8.3% in the second quarter. Management now guides to a full-year decline of 6% to 8% and has cut adjusted EBITDA guidance to $180 million to $190 million from $200 million to $210 million. Management admits the turnaround is “taking longer than expected.” International comps rose 1.5%, the one bright spot.
Domino’s is slowing as well. U.S. same-store sales grew just 0.3% in the third quarter, compared with 5.2% a year earlier. Revenue still rose 3.36%. EPS of $4.60 beat the $4.3904 consensus, and the chain added 175 net stores. Growth is slower, but it is still growth. Papa John’s is shrinking.
Balance Sheet and Track Record: Scale Favors Domino’s
Both companies have negative shareholders’ equity, common for heavily franchised businesses that borrow to return cash to shareholders. Papa John’s is at -$442.3 million, and Domino’s at -$3.955 billion. Domino’s has far more debt, including $4.77 billion in securitized notes at 4.2x leverage. It also earns enough to service that debt: fiscal 2025 operating income was $953.97 million, compared with $89.15 million at Papa John’s.
Over 10 years, Domino’s stock has returned 105.83%. Papa John’s has lost 68.85% over the same stretch.
Verdict: Domino’s Has the Stronger Income Profile
Domino’s wins all three categories, and it wins clearly for income investors. Its yield is lower than Papa John’s old yield. However, earnings support it: they have grown on record every year and include buybacks; the company still has about $1.15 billion in repurchase authorization left. The specific risk to watch is refinancing. $1.33 billion of debt is now current. The CFO has said “interest rates [are] accelerating pretty significantly,” and higher borrowing costs could squeeze the money available for future dividend increases.
Papa John’s now pays no dividend, which leaves its appeal linked entirely to the turnaround. The specific risk is that the turnaround takes too long. Management has promised only to “revisit” dividends and buybacks once the turnaround pays off, with no timeline. For anyone living on portfolio income, the 10% yield in the headline no longer exists (a near-double-digit yield that gets suspended is the classic dividend trap, and the seven warning signs are detailed in a free report).
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
