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Understanding Starbucks’s Dividend Policy

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Dividends

On June 19, Starbucks (SBUX) announced a quarterly dividend of $0.36, which represents a 20% rise from its previous dividend of $0.30. The dividend is set to be paid on August 24 to shareholders as of August 9. The dividend was announced at a payout ratio of 60.0%. Starbucks’s dividend yield was 2.8% as of June 22, and its stock price was $51.24.

Peer comparison

On March 1, McDonald’s (MCD) announced a dividend of $1.01 per share, paid out at a ratio of 52.6%. The company’s dividend yield was 2.5% based on the company’s June 22 stock price of $164.55. On April 26, Dunkin’ Brands (DNKN) announced a quarterly dividend of $0.35, paid out at a ratio of 50.7%. The company’s dividend yield was 2.0% based on its June 22 stock price of $69.76.

Share repurchases

Starbucks not only pays dividends but also rewards shareholders through share repurchases. On June 19, the company announced it would be returning $25 billion to shareholders through share repurchases and dividends in fiscal 2020, representing a $10 billion increase from the $15 billion announced on November 2, 2017. In the last four quarters, the company has repurchased 71 million shares for $4 billion. Next, we’ll look at Starbucks’s valuation.

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