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Monday, August 7, 2017

Recent Buy SBUX

Today I grabbed two shares of Starbucks for $55.60 per share. I wish I had more money to spend here. But some car repairs and lower summer salary (because of my family leave), have left me a little tight this month. My new administrative salary kicks in next month and I'm hoping to have more to invest then. This is about a 14 percent decline from it's 52 week high. SBUX has raised it's dividend each of the last 6 years. The yield is a little low at 1.80 percent, but with a 48.3 percent payout ratio there is room to grow. Starbucks is a Morningstar Wide Moat stock with a 4 star rating. Currently 27 of 33 analysts rate Starbucks a buy or Strong buy. The average price target of the 27 analysts is $64.87.

But what I really like about Starbucks is it's ability to adapt it's model. They have traditional stores kiosks, and beverage trucks. They offer premium high end coffee as well as smoothies and new food options. Starbucks has more company owned stores than there competitors and it seems that they are constantly innovating and altering their model. They have rapidly expanded into Asia and have a strong brand recognition. What I see with Starbucks is a decent valuation with room for sustainable dividend growth over the next few years.

Disclosure: Long SBUX

Disclaimer

Material presented on 'Dividend Seedling' is for informational and entertainment purposes only and is the opinion of the author (a social studies teacher and not a financial advisor). None of the information should be relied on or taken as investing advice or a recommendation to invest. None of the information or opinions expressed, constitutes a solicitation of the purchase or sale of any security or investment of any kind. Please do your own research before making any investments. Do not making any purchases unless you are prepared to lose your entire investment.

10 comments:

  1. Nice pick up. I just bought SBUX for the first time ever in July. I plan to make it a long term holding. I think they still have many more years of growth in front of them not to mention a healthy dividend growth rate too.

    ReplyDelete
    Replies
    1. Thanks Keith. I think long term they will be fine. If the price dips a little more I may have to go back to this well.

      Delete
  2. Good luck with Starbux. They have good coffee and a lot of loyal customers.

    ReplyDelete
    Replies
    1. Thanks DIS,

      That's for sure. I can't believe what they get people to pay for their coffee.

      Delete
  3. Nice buy Seedling. Starbucks is a good company and is quite popular.

    ReplyDelete
    Replies
    1. Thanks MDD. Now I only wish I had a crystal ball and waited a few days.

      Delete
  4. You beat me to it Seedling. I am definitely considering adding Starbucks to my portfolio. While I do believe the company has great growth potential, the main reason I'm considering adding it is because I spend sooo much money there on a daily basis. So, I might as well own part of the company.

    ReplyDelete
    Replies
    1. Wish I had waited a bit as it just dipped down a little more.

      Delete
  5. A lot of people are adding SBUX. I'm still not impressed by the p/e ration or the yield at the moment?

    ReplyDelete
    Replies
    1. I agree it's not the best yield. However, I think too often those are the only metrics dividend investors look at. The dividend has grown the last 6 years and has room to continue growing. They have a loyal customer base and have shown the ability to adapt. When factoring growth potential the valuation isn't terrible for a company this stable.

      Delete

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