What Starbucks' Latest Dividend Hike Means for Investors
Starbucks disclosed preliminary Q4 results and suspended its guidance, but also extended its long history of dividend hikes. Here's what you need to know.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Starbucks (SBUX) stock opened notably lower Wednesday after the coffee retailer announced preliminary financial results for its fourth quarter, which failed to impress Wall Street. However, shares have pared the bulk of these losses at last check after the company announced another dividend hike.
For its fiscal 2024 fourth quarter, Starbucks said net revenues declined 3% to $9.1 billion as global comparable-store sales fell 7%. Meanwhile, its earnings per share (EPS) were down 24% from the year-ago period to 80 cents.
The preliminary results fall well short of the $9.4 billion in revenue and $1.03 per share in earnings analysts expected, according to CNBC.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top line and bottom line," said Starbucks Chief Financial Officer Rachel Ruggeri in a statement. "We are developing a plan to turn around our business, but it will take time."
Starbucks also said that guidance will be suspended for the full fiscal year 2025 as a result of its recent CEO transition and "the current state of the business," adding that it "will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth."
Starbucks its hikes dividend again
"We want to amplify our confidence in the business, and provide some certainty as we drive our turnaround,” Ruggeri said. "For that reason, we have increased our dividend."
Indeed, Starbucks hiked its quarterly dividend by 7% to 61 cents per share, or $2.44 per share per share on an annual basis. The next dividend is payable on November 29 to shareholders of record on November 15.
Starbucks proudly noted that this marked the 14th consecutive annual dividend increase, which is notable for investors.
"Shares in companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with," writes Dan Burrows, senior investing writer at Kiplinger, in his feature "Best Dividend Stocks to Buy for Dependable Dividend Growth."
Additionally, companies that manage to raise their dividends year after year demonstrate "financial resilience" and a "commitment to returning cash to shareholders," he adds.
Is Starbucks stock a buy, sell or hold?
It hasn't been the best year on the price charts for the blue chip stock, which is up just about 3% on a total return basis (price change plus dividends). This vastly lags the S&P 500's 24% total return. But Wall Street remains bullish.
According to S&P Global Market Intelligence, the average analyst target price for SBUX stock is $99.97, representing implied upside of nearly 4% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Stifel is one of those with a Buy rating on the consumer discretionary stock, along with a $105 price target.
"We are Buy-rated on Starbucks because we believe the company will show improvement in transaction trends in the U.S. under Brian Niccol's new leadership," says Stifel analyst Chris O'Cull. "Based on Mr. Niccol's track record at Chipotle and Taco Bell, we believe the company will formulate a coherent strategy and deliver better execution to improve the U.S. segment's top-line performance."
Related Content
-
5 Vince Lombardi Quotes Retirees Should Live ByThe iconic football coach's philosophy can help retirees win at the game of life.
-
The $200,000 Olympic 'Pension' is a Retirement Game-Changer for Team USAThe donation by financier Ross Stevens is meant to be a "retirement program" for Team USA Olympic and Paralympic athletes.
-
10 Cheapest Places to Live in ColoradoProperty Tax Looking for a cozy cabin near the slopes? These Colorado counties combine reasonable house prices with the state's lowest property tax bills.
-
Don't Bury Your Kids in Taxes: How to Position Your Investments to Help Create More Wealth for ThemTo minimize your heirs' tax burden, focus on aligning your investment account types and assets with your estate plan, and pay attention to the impact of RMDs.
-
Are You 'Too Old' to Benefit From an Annuity?Probably not, even if you're in your 70s or 80s, but it depends on your circumstances and the kind of annuity you're considering.
-
In Your 50s and Seeing Retirement in the Distance? What You Do Now Can Make a Significant ImpactThis is the perfect time to assess whether your retirement planning is on track and determine what steps you need to take if it's not.
-
Your Retirement Isn't Set in Stone, But It Can Be a Work of ArtSetting and forgetting your retirement plan will make it hard to cope with life's challenges. Instead, consider redrawing and refining your plan as you go.
-
The Bear Market Protocol: 3 Strategies to Consider in a Down MarketThe Bear Market Protocol: 3 Strategies for a Down Market From buying the dip to strategic Roth conversions, there are several ways to use a bear market to your advantage — once you get over the fear factor.
-
Dow Adds 1,206 Points to Top 50,000: Stock Market TodayThe S&P 500 and Nasdaq also had strong finishes to a volatile week, with beaten-down tech stocks outperforming.
-
The Best Precious Metals ETFs to Buy in 2026Precious metals ETFs provide a hedge against monetary debasement and exposure to industrial-related tailwinds from emerging markets.
-
For the 2% Club, the Guardrails Approach and the 4% Rule Do Not Work: Here's What Works InsteadFor retirees with a pension, traditional withdrawal rules could be too restrictive. You need a tailored income plan that is much more flexible and realistic.
