Starbucks Dividend Alert… Some Say (SBUX)

Since the end of 2009, we have moved far beyond the waves of cost cuts and dividend cuts.  Since then we have shown that many companies would actually raise their dividends or start new ones.  It was just on March 4, 2010 that we featured a call that Starbucks Corp. (NASDAQ: SBUX) would be among companies which may start to pay dividends.

While we noted that it may be too soon for us or for the investing public to demand a dividend, the talk today is that a dividend announcement may be coming in as little as the next 48 hours.  Dow Jones cited some analyst notes today, but there is speculation from Wall Street that Starbucks may finally declare a dividend.

We outlined what it would bite out of operating earnings for each 1% yield increment, and the talk today is up to 2% as a yield.  The coffee giant is set to hold its 2010 Annual Meeting of Shareholders on Wednesday, March 24, 2010 at 10:00 AM Pacific Time, or 1:00 PM EST.  If any dividend announcement comes, it would seem that it would come early Wednesday morning to any time up until Noon EST.

We would welcome a dividend from Starbucks, but our statement from March holds for today.  The company has turned its ship back around and is back to a steadier business model.  The company can still hold on to its mantra in the frequently asked questions of its investor relations site:

• 8. Does Starbucks pay a cash dividend? No. Starbucks has never paid a cash dividend and presently intends to retain earnings to help finance the Company’s continued growth.

It’s up to you to decide whether Starbucks needs all of its growth capital in the new normal.   We think that it does not need all of that capital.  There have been five stock splits announced in the past at Starbucks, but with an $18.75 billion market cap there are no investors expecting a repeat of that feat ahead.

Shares have been higher almost all day with the broad market.  Right before the close, Starbucks  is up 1% at $25.22 and hit a high of $25.38.  Its 52-week high is $25.66 and Starbucks used to trade at almost $0.00 in late 2006 before its growth peaked.

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JON C. OGG