uploads/2016/07/7-5.jpg

Will There Be Change in SBUX’s Dividend Policy in Fiscal 3Q16?

By

Updated

Dividends

Starbucks (SBUX) paid dividends of $0.2 per share in each of the first two quarters of fiscal 2016. With dividends of $0.2 and $0.22 expected in fiscals 3Q16 and 4Q16, respectively, the company’s dividends for fiscal 2016 add up to $0.82, which represents a rise of 20.6% from $0.68 in fiscal 2015.

In fiscals 1Q17 and 2Q17, analysts expect the company to pay dividends of $0.24 in each quarter.

Article continues below advertisement

Dividend yield

Dividend yield indicates how much a company pays out in dividends each year relative to its share price. For the next 12 months, analysts expect Starbucks’ dividend yield to be 1.6%. During the same period, peers Yum! Brands (YUM), Domino’s Pizza (DPZ), and McDonald’s (MCD) are expected to pay dividend yields of 2.4%, 1.2%, and 3%, respectively.

Capital allocation

Apart from paying dividends, Starbucks also rewards its shareholders with share repurchases, or buybacks. In the last 12 months, the company has repurchased shares worth $2 billion, of which $1.6 billion worth of shares were repurchased in fiscal 2Q16 alone.

By the end of fiscal 2Q16, 25.2 million shares remained available under the share repurchase program. Board members authorized an additional 100 million shares in April 2016, taking the total to 125 million shares available for repurchase under the current repurchase program.

In the next article, we’ll look at Starbucks’ valuation multiples.

Advertisement

More From Market Realist