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.
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
-
States That Tax Social Security Benefits in 2026Retirement Tax Not all retirees who live in states that tax Social Security benefits have to pay state income taxes. Will your benefits be taxed?
-
QUIZ: What Type Of Retirement Spender Are You?Quiz What is your retirement spending style? Find out with this quick quiz.
-
How to Avoid the Financial Quicksand of Early Retirement LossesSequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
This Is How Early Retirement Losses Can Dump You Into Financial Quicksand (Plus, Tips to Stay on Solid Ground)
Sequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
How an Elder Law Attorney Can Help Protect Your Aging Parents From Financial MistakesIf you are worried about older family members or friends whose financial judgment is raising red flags, help is out there — from an elder law attorney.
-
Q4 2025 Post-Mortem From an Investment Adviser: A Year of Resilience as Gold Shines and the U.S. Dollar DivesFinancial pro Prem Patel shares his take on how markets performed in the fourth quarter of 2025, with an eye toward what investors should keep in mind for 2026.
-
'Donroe Doctrine' Pumps Dow 594 Points: Stock Market TodayThe S&P 500 rallied but failed to turn the "Santa Claus Rally" indicator positive for 2026.
-
Is Your Emergency Fund Running Low? Here's How to Bulk It Back UpIf you're struggling right now, you're not alone. Here's how you can identify financial issues, implement a budget and prioritize rebuilding your emergency fund.
-
An Expert Guide to How All-Assets Planning Offers a Better RetirementAn "all-asset" strategy would integrate housing wealth and annuities with traditional investments to generate more income and liquid savings for retirees.
-
7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial PlannerA business-as-usual approach to taxes in the first year of retirement can lead to silly trip-ups that erode your nest egg. Here are seven common goofs to avoid.
-
How to Plan for Social Security in 2026's Changing Landscape, From a Financial ProfessionalNot understanding how the upcoming changes in 2026 might affect you could put your financial security in retirement at risk. This is what you need to know.
