Starbucks Dividend Growth Slows Significantly
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy SBUX?
Source: NASDAQ.COM
- Dividend Growth Trend: Starbucks' dividend grew at an average annual rate of 24.5% over the past decade, but has slowed dramatically since 2021, with only a 1.6% increase in 2022, indicating troubling fundamentals that may lead to a halt in future dividend growth.
- Payout Ratio Warning: The company's payout ratio has exceeded 200%, meaning it spends more than twice its net income on dividends, which is a significant warning sign regarding the sustainability of its dividend payments.
- Declining Cash Flow: Starbucks' cash flow from operations has dropped from approximately $5.6 billion a year ago to just under $4.3 billion today, highlighting a reduction in available cash after dividend payments, raising further concerns about dividend sustainability.
- Suspended Buyback Program: Starbucks has not repurchased shares since 2024, and the expansion of its employee stock investment plan is diluting shares, which could negatively impact stock prices in the short term, prompting investors to carefully consider the stock's investment potential.
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Analyst Views on SBUX
Wall Street analysts forecast SBUX stock price to fall
21 Analyst Rating
12 Buy
7 Hold
2 Sell
Moderate Buy
Current: 96.760
Low
59.00
Averages
96.12
High
115.00
Current: 96.760
Low
59.00
Averages
96.12
High
115.00
About SBUX
Starbucks Corporations is a roaster, marketer, and retailer of specialty coffee globally. Its North America segment includes the United States and Canada. Its International segment includes China, Japan, Asia Pacific, Europe, Middle East and Africa, Latin America, and the Caribbean. Its North America and International segments include both Company-operated and licensed stores. The Channel Development segment includes roasted whole bean and ground coffees, Starbucks-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino and Starbucks Doubleshot, foodservice products, and other branded products sold outside the Company-operated and licensed stores. A large portion of its Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestle, while its global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Co., Ltd., Arla Foods amba, Nestle, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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