The FTSE 250 group has the master franchise agreement to own, operate and sub-franchise Domino’s stores in the UK and Ireland.

Last week (23 April), the share price shot up more than 10% in a single day. And it’s now up 16% inside a month. Yet, despite this, the stock’s still down 56% since the start of 2022. Is it worth looking at?

Busy summer coming up

The news that sent the stock up last week was a strong Q1 trading update. This showed the firm enjoyed its fastest growth in 11 quarters, with total system sales jumping 5.8%, including like‑for‑like growth of 4.5%.

During the quarter, the group launched its ‘Chick ‘N’ Dip’ offer. The accompanying ads have been everywhere: they show hefty chunks of boneless chicken being dunked into various sauces, set to the familiar ‘Domino-hoo-hoo‘ jingle. 

Early feedback’s been good, and Domino’s has also just launched its ‘Italianos’ range (built on a thin crust pizza collection). So there’s now plenty of choice for football fans to get stuck into during the World Cup this summer.

Speaking of which, this strong start to the year sets the firm up nicely for the second and third quarters. Five of the six group games England and Scotland play in June start at either 9pm, 10pm or 11pm. That’s prime pizza delivery time!

Another positive worth highlighting here is that the group’s costs are hedged for the current financial year, with some covered into 2027. And despite the uncertain backdrop, management isn’t expecting any supply-related issues.

CEO Nicola Frampton said: “As we move through 2026, we remain firmly focused on growing the core business and improving our operational execution for current and future years.”

GLP-1s and rising inflation rate

These results are encouraging given all the concerns about GLP-1 drugs. Clearly, they’re not harming sales, despite record use. And the ‘Italianos’ offer might appeal to GLP-1 users, as thinner-crust pizzas are obviously easier on the stomach than doughy, stuffed ones.

The biggest risk to sales growth is probably rising inflation, which is putting more pressure on fragile consumer confidence. Once the football’s over, consumers might tighten their belts, setting the pizza group up for a tougher period later in the year.  

Passive income

What about the dividend yield? At 5.7%. that looks attractive to me. It means 2,656 shares would unlock £300 in passive income, assuming the yield’s sustained, which now looks likely given the strong trading update.

At the current price, these shares would cost about £5,265.

Should investors consider a slice?

Now, given its maturity, this isn’t a company I’d expect red-hot growth or finger-licking dividend growth. After all, the group ended 2025 with 1,399 stores across the UK and Ireland. That’s a lot already.

However, the trusted brand, well-oiled delivery operation, diversified food offerings, and high dividend yield make me believe the stock’s worth considering. Especially while it’s trading cheaply, at just 10.5 times next year’s forecast earnings.

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In hindsight, it was indeed worth a closer look, as had someone bought £5,000 worth of shares on Tuesday, 7 April, when the stock market opened after the Easter break, that investment would now be worth about £5,800 – a great result in a little over two weeks!

The strongest growth in 11 quarters

Is the stock still worth a look at current levels? I think so.

Earlier today (23 April), the company posted a trading update for Q1. And while it was brief, it was very encouraging.

For the quarter, total system sales increased by 5.8%, with like‑for‑like growth of 4.5% (its strongest growth in 11 quarters). Meanwhile, total orders rose by 2.3%, with like‑for‑like orders up 0.9%.

In terms of cost management, the company said that its costs are hedged for the current financial year with some costs hedged into 2027. That’s clearly a positive.

As for guidance, the group said that it currently expects to achieve its earnings expectations for the full year. I’m not exactly sure what these expectations are but the market is currently looking for 18p per share in earnings.

We have carried the positive momentum seen at the end of 2025 into 2026, with trading performing in line with our expectations.
Domino’s Pizza CEO Nicola Frampton

Tasty new products

It’s worth noting that on the product front, the company said that it successfully launched ‘CHICK ‘N’ DIP’ during the quarter. Initial trading performance here met expectations with positive feedback from customers.

It also said that it had recently launched its ‘Italianos’ pizza range which is built on a thin crust pizza collection. I think this could be a winner for the company – consumers today are often looking for this type of pizza.

So overall, business performance looks robust. However, there doesn’t seem to be any sign of a major slowdown from GLP-1 weight-loss drugs, which is a future risk.

How’s the valuation?

As for the valuation, the stock still looks cheap. If we take that 18p per share earnings forecast and compare it to the current share price of 201p, we get a forward-looking price-to-earnings (P/E) ratio of just 11.

That strikes me as good value. Especially when you consider the company’s strong brand and high return on capital.

What about the dividend yield?

Zooming in on the dividend yield, it’s still very attractive, despite the recent share price rise. With analysts expecting a payout of 11.1p per share for 2026, we are looking at a yield of around 5.5%.

It’s worth pointing out that dividend coverage (the ratio of earnings per share to dividends per share) is solid at around 1.6. That’s one of the reasons I highlighted the stock a few weeks ago – it has much better dividend coverage than a lot of other high-yield UK stocks.

Put all this together, and there’s a lot to like about Domino’s from an investment perspective. I believe this stock is worthy of further research.

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But such businesses can have quite a few bumps along the way, I have found. Indeed, over the past five years, the FTSE 250 has gained 16% — but that is less than a third of the 50% gain the FTSE 100 has delivered over that period.

One FTSE 250 share I bought when I thought it was a bargain has been dogged by poor performance. But a trading statement issued today (23 April) has seen its share price move up 9%.

Could this potentially be a sign of better days to come?

Strong brand, exposed to shifting consumer trends

The share in question is Domino’s Pizza (LSE: DOM), the local master franchisee of the US pizza giant.

When I bought in, I thought the investment case was simple. Domino’s had been winding down overseas operations in some European markets and focusing on growth potential in its UK market. It looked set to benefit from economies of scale and a clearer strategic focus. It has a strong brand, lean operating model and loyal customer base.

However, things did not go well. A surge in demand for pizza deliveries over the pandemic years started to fizzle out. Chicken threatened to displace pizza in the hearts of some delivery customers.

Even after today’s boost, the FTSE 250 share is still 46% cheaper than it was five years ago.

A positive start to the year

That price fall has helped boost the Domino’s dividend yield to 5.7%.

The tasty passive income streams are attractive to me as an investor and help explain why I have hung on to the share, alongside the fact that I still believe in the basic investment case I outlined above.

I was cheered by the positive news in today’s update when it comes to that investment case. The company’s launch of a chicken dipping product helps to combat the threat that chicken demand could displace pizza orders for some customers.

In the first quarter, total orders were up around 2% year on year. Some of that came from expansion and some from sales growth at existing outlets. Total sales revenues were up 6%, suggesting that as well as higher sales volume, the company was able to raise its prices.

Frankly that sort of growth is not exceptional. Greggs has delivered better numbers and still been punished by the City.

But the difference is around expectations.

Domino’s has lately been dogged by investor concerns about whether its market size can grow at all, or even stay the same. So delivering growth is better than many people expected, helping push up the share price.

This still looks cheap to me

I am still in the red on my Domino’s position, although am happily collecting dividends along the way.

But I continue to hold the share and plan to keep doing so, as I think it looks cheap given its strong brand, proven business model and ongoing growth opportunities.

Although the current price-to-earnings ratio of 13 may not look like a screaming bargain, last year’s operating profit had shown a sharp decline. If the company can translate growth into earnings recovery, the current valuation looks low to me.

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But does this new momentum now mean time’s running out for investors to snap up cheap UK stocks?

What’s going on with FTSE shares?

There are a lot of factors behind the FTSE 100’s massive outperformance last year. But one of the biggest drivers is something called capital migration. With US stock valuations reaching record highs and uncertainty creeping into the American economy, investors worldwide have begun rebalancing their portfolios. And a lot of this capital has started moving into other markets, including the UK.

That isn’t surprising given the enormous discount that UK shares trade at versus international peers. For reference, the average earnings multiple for a FTSE 100 stock is around 15. In the US, it’s currently closer to 25.

With more uncertainty now creeping into the US stock market on the back of AI disruption fears and surging global oil & gas prices, this capital migration could continue. And that means 2026 could be another gangbuster year of growth for FTSE shares.

Is time running out?

Capital migration creates a powerful tailwind for the UK stock market. But it’s important to highlight that the persistent discount in valuations isn’t random. It’s driven by a similarly persistent economic growth and productivity problem – something that successive governments have failed to solve.

The good news for investors is that this also means there are and likely will still be plenty of bargain-buying opportunities to capitalise on for many years to come. And even in the UK market, investors who identify these opportunities ahead of the crowd can go on to enjoy impressive returns.

So which stocks should investors be looking at today?

A top value pick?

According to the team of expert analysts at Peel Hunt, Domino’s Pizza Group (LSE:DOM) could be one of the most misunderstood FTSE shares on the market today. It’s a highly cash-generative franchise business that’s been serially re-rated downwards, despite taking market share thanks to a structurally sound business model.

The company generated £80.7m of free cash flow in 2025, enabling management to continue expanding its franchise empire as well as simultaneously investing in its industry-leading technology infrastructure. Instead, its competitors have been busy closing stores.

Despite this, Domino’s shares are trading at their lowest point in over a decade. Yet some caution’s justified.

Stagnant top-line growth alongside continuously rising cost pressures, courtesy of food and wage inflation, is putting a lot of pressure on the bottom line. And this impact is only being compounded by the weakness in UK consumer spending.

But looking at the Domino’s share price, this FTSE stock’s seemingly been repriced as if these problems are structural when, in reality, they appear to be cyclical. Peel Hunt has come to a similar conclusion, issuing a 275p share price target – almost 60% higher than where the stock trades today.

There’s no denying the near-term earnings picture’s cloudy. But looking out to the longer term, Domino’s highly cash generative business model perfectly positions the company for a potentially impressive rally once consumer spending starts to bounce back. It’s worth a closer look.

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Here, I’m going to show how an investor could potentially generate income of nearly £1,500 a year with just five stocks. Could this kind of strategy help you achieve financial independence?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Building a high-yield portfolio

In the table below, I’ve put five FTSE 350 stocks along with their forward-looking dividend yields. Note that these yields are based on analysts’ estimates for dividend payments and they may not be accurate.

The average yield across those five stocks is 7.3%. This means that if an investor was to split £20,000 across these names, they could potentially be looking at income of around £1,460 per year.

What’s the catch?

That’s obviously a fair bit of income from a £20,000 investment. So what’s the catch? Well, first, dividends are never guaranteed as companies can reduce or cancel them at any time and second, capital’s at risk (unlike with a bank account).

These are all solid companies. However, they all face risks and investors could potentially experience share price losses.

In the case of Aviva, for example, its share price could drop if the stock market continues to fall. Because lower equity markets will translate to lower earnings on investment assets under management.

Turning to Primary Health Properties, its share price could fall if interest rates rise. Because it’s a property company.

Given that each company has its risks, it wouldn’t actually be very smart to allocate all of a portfolio to just five stocks. If one or two names tanked, it could really hurt overall returns.

Generally speaking, it’s sensible to own at least 15-20 different names when investing in individual stocks. This can significantly reduce stock-specific risk.

Worth a closer look?

Going back to the five names though, I think they’re all worthy of further research today. I’ve selected them because they either offer value or defensiveness, alongside a high yield.

Of the five, one worth highlighting is Domino’s Pizza. It has the highest dividend coverage ratio (the ratio of earnings per share to dividends per share) at about 1.6, meaning that, in theory, its dividend is the most secure.

Other things to like include its strong brand and high level of profitability (its franchise model’s very profitable). These attributes often lead to good results from an investment perspective.

On the downside, consumer habits and preferences are changing. Weight-loss drugs are a risk here – reducing appetites and cravings.

Competition’s also high. Today, there are lots of great places to pick up a tasty pizza cheaply. Overall though, I believe Domino’s is worth a closer look. With analysts forecasting earnings per share of 18.1p this year, the price-to-earnings ratio’s under 10.

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But just because a stock is down, doesn’t necessarily mean it will go up again. How can we differentiate between undervalued companies suffering a minor setback — and those that might never recover?

Identifying good value

Lately, two big UK dividend names have been hammered and now sit close to 10‑year lows: WPP (LSE: WPP) and Domino’s Pizza (LSE:DOM).

On the surface, both offer tempting income, but for very different reasons. Think of them as two shops on your local high street: one struggling with a changing world, the other hit by rising costs and fussier customers.

Yet I believe they’re both well-positioned to bounce back. Here’s why.

A shifting ad landscape

WPP makes its money helping brands run ads across TV, billboards, social media and more. Its share price has dropped more than half in the last year as global ad spending has slowed and earnings have fallen.

Recent trading updates showed revenue shrinking and profits squeezed, as clients cut budgets and shifted to in‑house or cheaper options (such as AI). Subsequently, investors are wary about the company’s future. But it hasn’t given up, implementing an aggressive strategy to tackle the threat of AI.

With the share price having sunk so far, the yield has shot up towards double digits. But that big number comes with a catch: the payout ratio is very high and dividends have already been cut.

If its turnaround plan works and ad spending recovers, the current low price presents an opportunity. If not, further dividend cuts are still on the table.

This is a classic ‘high-risk/high-reward’ recovery play. Overall, I think it’s worth considering because its sheer size and brand familiarity give it a good chance of bouncing back.

Changing consumer habits

Domino’s is a different story: it runs the UK master franchise for the pizza brand people order on a rainy Friday night. Despite being a household name, the share price is down about 50% over the past year and is sitting at its lowest level in more than a decade.

Management has blamed weaker consumer demand, rising labour costs and higher bills for franchisees. As a result, it recently cut profit guidance, which understandably spooked the market. This has led to a notable rise in debt, adding to worries in a tougher, slower‑growing takeaway market.

On the income side, things look attractive. It offers a yield around 5.5%, with dividends covered by earnings and growing slowly over time. Plus, the core business is still profitable, with strong brand power, huge online ordering (around 90% of sales are digital), and scale advantages in dough, logistics and advertising.

If inflation eases and wage growth settles, margins could improve, and new menu ideas plus more stores might help profits recover.

The bottom line

For UK income investors, WPP’s low valuation and high yield is very attractive, but risky. It could be a value trap if the turnaround stalls.

Domino’s looks more like a solid takeaway favourite on sale. It has debt and competition risks, but with a steadier, better‑covered dividend that might be worth thinking about for a long‑term ISA or SIPP drip‑feed.

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Yet, even with such tremendous growth under its belt, the UK stock market might still have some big winners in 2026. And right now, institutional investors have their targets locked on a handful of more dividend-paying stocks set to potentially deliver explosive gains this year.

So the question is, what are these potential winners?

1. B&M European Value Retail

After strategic missteps, inventory mismanagement, missed earnings targets, and even a minor accounting scandal, B&M (LSE:BME) shares have been utterly decimated in the last few years. In fact, its market-cap has collapsed by almost 70% in the last two years.

But with a new leader at the helm executing a fresh turnaround strategy, some institutional investors believe a massive buying opportunity may have emerged.

Revenue growth remains lacklustre, but sales have begun slowly ticking up again. And with international operations building momentum, the experts at Berenberg believe B&M shares could surge by 70% from current levels if the turnaround is successful.

Obviously, the stock comes with significant execution risk. And the fierce competitive landscape from other discount retailers only adds to the challenge. But with a 7.5% yield, the dividend stock could be worth a closer look.

2. Domino’s Pizza Group

Domino’s Pizza (LSE:DOM) is another dividend-paying stock that analysts believe could be ripe for a turnaround. With the CEO recently stepping down and the economic landscape for pizza takeaway less than ideal, the company’s similarly been under significant pressure, with its shares being slashed in half since 2024 kicked off.

But with a new loyalty programme rolled out this year, signs of improving unit economics emerging in Ireland, and an industry-leading store footprint, the team at Peel Hunt has issued a 275p share price target – roughly 52% higher than where the stock trades today.

Of course, while the customer loyalty programme had a successful pilot scheme, that doesn’t mean a full-scale rollout will meet performance expectations. Continued macroeconomic weakness alongside UK pizza market saturation may prevent this target from being hit. Nevertheless, with a 6.1% yield on offer, this is another dividend stock worth investigating further.

3. Mortgage Advice Bureau

Another dividend stock on Berenberg’s shopping list is Mortgage Advice Bureau (LSE:MAB1). Just last month, its analysts reiterated a 1,150p share price target – roughly 50% ahead of where the stock trades today.

The forecast mostly revolves around a UK housing market recovery narrative. An estimated 1.8 million fixed-rate mortgages are due to switch to variable rates throughout 2026, up from around 1.6 million in 2025. And with many households likely seeking to refinance, it creates a potentially lucrative advisory opportunity for this business.

The company’s facing increasingly fierce competition from large banks offering mortgage advisory services directly. What’s more, the market seems to be pricing in multiple interest rate cuts throughout 2026. But if these fail to materialise, mortgage rates could actually start climbing again, lowering refinancing demand.

With a 2.8% dividend yield on offer, Mortgage Advice Bureau could still prove to be a lucrative income opportunity. That’s why I think it deserves a deeper dive. But there’s no denying significant cyclical risk is attached.

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Ready for departure

The first one is Trainline (LSE:TRN). The stock is down 45% over the past year, which will alarm some investors. Part of this revolves around worries with the UK government’s plan to launch a state-backed rail ticketing platform under Great British Railways. After all, this could erode Trainline’s core market share. However, implementation might be several years away, so I don’t see this as a concern right now.

In terms of forecasts, Deutsche Bank is predicting it could rise to 580p in the coming year. Considering the current share price of 204p, this represents a well over 100% increase. Even when I take the average of the 14 contributors I have access to, it’s a very respectable 381p. This reflects an 87% rally.

Of course, these are just predictions. But the bias is definitely towards the stock moving higher. Part of that comes from the valuation, with the share price move in the past year making it look attractive for value buyers. Further, H1 2025 results from November showed a 14% increase in profits compared with the same period last year. It also revised earnings higher, and expects net ticket sales to rise by 6%-9%.

The business flagged up rising leisure travel and general strength in the UK consumer, which is a great sign for further growth in 2026. I agree that the shadow of the potential state platform will linger, but if anything, it might have caused the stock to become oversold right now.

Time for an extra slice

Another example is Domino’s Pizza (LSE:DOM). In a similar way to Trainline, the stock has been beaten up recently, down 39% over the past year and currently trading at 182p.

Despite this, some analysts remain optimistic about the company’s future. For example, Douglas Jack at Peel Hunt is still predicting the stock to rally to 275p this year. In terms of reasoning, the note said “we believe Domino’s valuation overlooks it having the most profitable franchisees and very large-scale competitive advantages”.

Valuation appears to be the main factor here, with the average target price from 10 contributors at 244p. The stock recently hit its lowest level in a decade, though in some respects the decline is warranted given business conditions. Domino’s revised earnings were lower last summer due to weak demand and rising costs. In a November update, it spoke of a “tough operating environment” that the management team believe could persist into this year.

That remains a risk going forward. However, Domino’s is one of the most recognised pizza brands in the UK. It boasts a strong digital ordering platform, with the brand name giving it pricing power and customer loyalty even in tighter consumer spending periods.

On balance, I think both companies are higher-risk options for investors to consider, but the potential rewards (reflected in the forecasts) could be lucrative.

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Here are what the pros think are worth considering.

1. Incoming rebound for pizza?

Domino’s Pizza Group (LSE:DOM) had a pretty rough 2025. Weak economic conditions hampered demand for pizza takeaway, resulting in lacklustre growth. Throw in the added pressure of inflation on its bottom line leading to earnings stumbling and, ultimately, the CEO stepped down from his role.

With all that in mind, seeing Domino’s shares fall by over 30% since January last year isn’t a major surprise. But could this be a buying opportunity? The analysts at Peel Hunt certainly seem to think so.

With Domino’s free cash flow remaining strong supporting its 6.2% dividend yield, its technological competitive advantages intact, and its price-to-earnings ratio sitting at just 9.1, the stock’s valuation now looks divorced from the underlying business. And subsequently, the shares could see a rapid recovery once UK economic conditions recover.

Of course, there’s no guarantee this recovery will happen anytime soon. If fragile consumer confidence persists throughout 2026 and into 2027, Domino’s shares could remain in dirt-cheap territory for a while. Nevertheless, with the challenges surrounding the company seemingly temporary, it could be a dividend stock worth investigating further.

2. Business communications

Another stock to buy, according to Peel Hunt, is the business communications specialist Gamma Communications (LSE:GAMA). The firm specialises in helping corporations move away from traditional phone systems and use cloud-based internet communications instead.

Like Domino’s, the last 12 months have also been a bit rough for the FTSE 250 stock, falling by more than 30%.

Wider economic uncertainty has seen a sharp drop in demand for Gamma’s services among small- and medium-sized businesses (SMBs) in the UK. And alongside other headwinds, management went on to reduce its earnings guidance, spooking investors in the process.

Yet the experts at Peel Hunt, once again, see a buying opportunity. As UK economic conditions improve, IT investments among SMBs are expected to recover. And looking to the longer term, the secular tailwind of switching to cloud-based communications remains intact.

Perhaps a yellow flag for investors to consider carefully is the upcoming departure of the group’s CFO in March. Considering the business is at a critical junction, navigating through a tough operating landscape, a leadership transition introduces significant execution risk, especially if a talented successor isn’t identified in time.

Nevertheless, with its long-term trajectory still intact and the price-to-earnings ratio sitting at just 12.7, the bar for performance seems to have been set relatively low.

For income investors, the yield may not look too impressive at just 2.3%. But with the company currently on track to deliver its 10th consecutive year of dividend hikes backed by cash flows, this payout could eventually grow to something far more substantial in the long run.

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Here are two stocks — one from the FTSE 100 and the other the FTSE 250 — that I reckon have the potential to deliver regular income and share price growth on top. They’re both yielding above 6% on a forward-looking basis.

Pizza

Domino’s Pizza Group (LSE:DOM) has had a terrible 2025, plunging 45%. And this means the FTSE 250 pizza stock is now 62% lower than it was at the start of 2022. Ouch.

This reflects sluggish growth and ongoing margin pressure at the UK master franchise of the Domino’s brand. Consequently, the dividend has been a bit all over the place, falling from 14.7p per share in 2020 to 10p in 2022 then rising to 11p last year.

Given the weak consumer environment, this isn’t a stock without risk. In November, management warned that “the tough operating environment is likely to continue to impact order counts into 2026“.

However, while challenging, things do appear to be stabilising, with Q3 total system sales up 2.1% and like-for-like system sales up 1%. For the full year, management kept its guidance for underlying EBITDA of £130m-£140m. Dividends should continue.

Meanwhile, the company says its Chick ’N’ Dip offer has started well in the North West of England and Northern Ireland. It may be rolled out across all stores in 2026, and the firm is continuing to assess opportunities for the acquisition of a second brand to kickstart growth.

The stock looks cheap at 9.4 times forward earnings, while there’s a 6.3% forward dividend yield on offer. This could be one to look at more closely for its turnaround potential, I feel.

Insurance

Next up is Aviva (LSE:AV.), which is the polar opposite of Domino’s Pizza Group. Year to date, the FTSE 100 insurance stock has surged 44%.

Over five years, Aviva has more than doubled!

Yet despite this huge run, Aviva is still sporting an attractive 6.1% forward dividend yield. And given management’s bullishness on the direction of the business, investors might be set for some strong income growth.

The outlook for Aviva has never been better. The advantages of our diversified business, 25m strong customer base, and majority capital-light earnings, mean we expect to deliver more and more for our shareholders and customers. CEO Amanda Blanc

Aviva now expects its business to be over 75% capital-light by the end of 2028. This means it will use less capital to deliver growth, which bodes well for dividends and share buybacks. 

That said, a UK recession would pose challenges for Aviva, especially if it was severe enough to cause households and businesses to immediately tighten their belts.

As things stand though, the stock looks decent value, trading at 11.5 times next year’s earnings. Putting this together with the 6.1% yield, share buybacks resuming next year, as well as the recent Direct Line acquisition, and I think Aviva is still worth considering.

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