Of course, Starbucks (SBUX) does not have a dividend. But, they might want to revisit that.
Starbucks’s is no longer a growth stock, at least not in the classic sense. Its shares are down about 22% this year. McDonald’s (MCD), a rival in the coffee game, among other things, is up over 15%.
McDonald’s raised its dividend 50% yesterday, and its share are up almost 5% to a 52-week high of $53.73. According to MarketWatch, the MCD CEO said "Our business momentum, strong stable cash flow, borrowing capacity and anticipated future capital needs reinforce our view that cash available for dividends and share repurchase will continue to grow."
Starbucks is doing well financially, too. In the last quarter its operating income was $245 million. The company has about $325 million in cash and short term investments. Fully diluted shares number 764 million. A $.20 a year dividend might work.
If Starbucks does not want to dividend in cash, it could send out one of those little cans of mocha for each share. But, at $2 per, that is too much.
Douglas A. McIntyre