Starbucks Surprises Investors with Dividend Increase

Starbucks [[SBUX]] announced today that the company will increase their quarterly dividend by 30% to $.13 per share.

 

Starbucks just initiated their dividend program in March of this year, so such a quick dividend increase is sure to surprise and thrill dividend investors. The $.03 per share dividend increase will push SBUX dividend yield to 2.1%.  

 

Troy Alstead, Executive Vice President and CFO said, “given the continued strength of our business, as evidenced by record third-quarter earnings and the resulting strong cash flow, we have increased our quarterly cash dividend. Our commitment to returning value to our shareholders is demonstrated in both the increased cash dividend and the repurchase of 6.7 million shares of Starbucks common stock in the third quarter.”

 

The surprise dividend increase comes as the coffee retailer posted fiscal third quarter earnings growth of 37% and boosted their guidance. However, shares fell in after-hours trading as Wall Street was hoping for a stronger forecast.

 

When Starbucks initiated their dividend program in March, they announced an initial target payout range of 35 – 40% of net income. With today’s dividend increase, SBUX will payout 37% of projected 2011 earnings of $1.41 per share.

 

The increased dividend will be payable on August 201, 2010 to shareholders of record as of August 4, 2010.  

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