Shares of Starbucks (SBUX) are up 3% after the retail coffee chain raised its quarterly dividend payment to stockholders.
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The Seattle-based company announced an incremental dividend increase, lifting its distribution to $0.62 per share from $0.61 previously. Despite the small increase, news of the dividend hike was enough to send SBUX stock higher on Oct. 2.
The increased dividend is payable on Nov. 28 of this year to shareholders of record as of Nov. 14. The change gives Starbucks an annual dividend payout of $2.48 per share. “We remain committed to returning cash to our shareholders while balancing our investments in our long-term growth strategy,” said the company in a news release.
Dividend Commitment
Starbucks first paid a quarterly dividend in 2010, offering shareholders back then a quarterly distribution of $0.05 per share. The coffee giant has grown its dividend at a compound annual growth rate of approximately 17.5%. Analysts say the growth highlights Starbucks’ commitment to the dividend payment and returning value to shareholders.
Starbucks’ latest dividend increase comes after the company recently announced that it is closing hundreds of stores in the U.S. and Canada, and cutting about 900 jobs across its support teams. The cost reductions are part of the company’s “Back to Starbucks” campaign that aims to drive customer traffic and boost sales.
Is SBUX Stock a Buy?
The stock of Starbucks has a consensus Moderate Buy rating among 21 Wall Street analysts. That rating is based on 13 Buy, six Hold, and two Sell recommendations issued in the last three months. The average SBUX price target of $102.21 implies 17.88% upside from current levels.
