Starbucks Corporation (NASDAQ:SBUX) is scheduled to disclose its first-quarter financial results prior to the market open on Wednesday, January 28. Market analysts are forecasting earnings of 59 cents per share for the fourth quarter, representing a decline from 69 cents per share during the same quarter last year. Revenue expectations stand at approximately $9.65 billion for this period, slightly higher than the $9.4 billion recorded one year earlier.
Within this context, certain investors are focusing on the dividend aspect of Starbucks’ equity. The company currently offers an annual dividend yield of 2.57%, distributing a quarterly payment of 62 cents per share, which equates to an annual dividend of $2.48 per share.
Investors looking to translate this dividend yield into a reliable source of income may calculate the required investment size according to their income goals. For example, to generate $500 each month, or equivalently $6,000 annually, from dividends alone, an investor would need to hold approximately 2,419 shares of Starbucks stock. At the current dividend rate, this corresponds to an investment of roughly $233,022.
For those seeking a more modest monthly income of $100, or $1,200 per year, the shareholding requirement is around 484 shares. This correlates to an investment of approximately $46,624.
The calculation method involves dividing the targeted annual dividend income by the annual dividend payment per share. Specifically, $6,000 divided by $2.48 results in 2,419 shares, while $1,200 divided by $2.48 yields 484 shares.
It is important to recognize that dividend yields are subject to change because both the dividend payments and the market stock price fluctuate over time. The dividend yield is calculated by dividing the dividend paid over a year by the stock's current price.
To illustrate, if a stock pays a $2 annual dividend and trades at $50 per share, the yield stands at 4%. A rise in stock price to $60, with dividends held constant, diminishes the yield to 3.33%. On the other hand, a price drop to $40 increases the yield to 5%. Furthermore, any change in the dividend payment amount while the stock price remains fixed will have a corresponding impact on the yield.
Regarding recent market activity, Starbucks shares declined by 1.3%, closing at $96.33 on Monday.
This analysis considers several fundamental financial elements pertinent to investors evaluating Starbucks both for its earnings prospects and its dividend income potential. The expected quarterly earnings decrease from last year’s figures warrants attention, as it reflects potential pressure on profitability. Meanwhile, Starbucks’ dividend payout provides a quantifiable income opportunity, though prospective investors must be mindful of the variables influencing yield and share price fluctuations.