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Starbucks (SBUX) Cheers Investors With Dividend Increase

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Starbucks Corporation (SBUX - Free Report) has announced an increase in its dividend payout, in a bid to favor its shareholders. The company raised its quarterly dividend by 7.5% to 57 cents per share. This will be paid on Nov 24 to its shareholders on record as of Nov 10.

Following the hike, SBUX’s new annualized dividend amounted to $2.28 per share, giving a yield of 2.4%. In 2022, it lifted its dividend by 8.2%. SBUX’s payout ratio is 64, with a five-year dividend growth rate of more than 9.7%.

Along with boosting returns for shareholders, dividend hike elevates a stock's market value. Therefore, companies frequently employ this strategy to draw in new investors and maintain loyalty of existing ones.

We commend Starbucks for its ongoing commitment to increasing shareholders’ returns, even in the face of widespread inflation, which continues to impact numerous industries. These actions underscore the company's robust business position and resilience of its cash flow.

Ever since management initiated dividend in 2010, SBUX has been uplifting it in each of the previous 13 years. Starbucks is one of the most recognized coffee brands in the world. From espresso to specialty roast and ground coffee to premium single-serve market, it commands authority and a leading position in all coffee segments.

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Stock Performance

So far this year, this Zacks Rank #3 (Hold) stock has gained 12.3% compared with the industry’s 10.2% growth.

Improving customer experience with innovative new store designs and upgraded product offerings, and supply-chain efficiencies bode well. Also, focus on product innovation and store growth acts as a tailwind. For fiscal 2023, it anticipates global comparable sales to reach the high end of 7-9% target range.  However, increased expenses and inflation are major concerns.

Further, management aims to improve global market share by judiciously opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs, aggressive product innovation and brand building. In fiscal 2017, 2018, 2019, 2020, 2021 and 2022, SBUX added 2,250, 2,300, 1,900, 1,400, 1,173 and 1,120 net new stores, respectively.

Key Picks

Below we present some better-ranked stocks in the Zacks Retail-Wholesale sector.

Carrols Restaurant Group, Inc. (TAST - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 67.9%, on average. Shares of TAST have surged 286.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TAST’s 2023 sales and earnings per share (EPS) indicates 8.1% and 124.3% growth, respectively, from the year-ago period’s levels.

BJ's Restaurants, Inc. (BJRI - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 121.2%, on average. Shares of BJRI have increased 2.1% in the past year.

The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS implies improvements of 5.6% and 423.5%, respectively, from the year-ago period’s levels.

Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has gained 40.9% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests rises 19% and 11.6%, respectively, from the year-ago period’s levels.

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