Starbucks Dividend Stock Analysis

Starbucks Corporation (SBUX), together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company operates in four segments: Americas; China/Asia Pacific; Europe, Middle East, and Africa; and Channel Development.

Starbucks is a dividend challenger, which has increased dividends every single year since it initiated its first dividend in 2010. The last increase occurred in June 2018, when Starbucks hiked its quarterly dividend by 20% to 36 cents/share.

The stock has compounded by 21.90%/year over the past decade. This came off the lows in 2008, when the stock was depressed due to mismanagement and the global financial crisis. Future returns would be much more reasonable in my opinion.

Over the past decade, the company managed to boost earnings from $0.44/share in 2007 to $1.97/share in 2017. Earnings per share growth seems to have slowed down since 2015. That being said, Starbucks is expected to earn $2.41/share in 2018.

Broadridge Financial Delivers Strong Dividend Growth

Broadridge Financial Solutions, Inc. (BR) provides investor communications and technology-driven solutions for the financial services industry worldwide.

The company raised its quarterly dividend last week by a massive 32.90% to 48.50 cents/share. With this increase, the company's annual divided has increased for the eleventh consecutive year since becoming a public company in 2007.

The new quarterly payment is almost seven times larger than the dividend payment from a decade ago. This was possible due to the rapid expansion in the dividend payout ratio, as earnings managed to double.

For history buffs, Broadridge Financial was spun-off from Automatic Data Processing in 2007. ADP itself has a long history of growth and dividend increases, which it has passed onto its spin off-spring.

This dividend achiever is careful in its capital allocation strategy, as it focuses on projects with high return on investment, which could improve its competitive position and ability to serve its customers efficiently and cost effectively. This mindset has allowed the company to grow earnings and excess free cash flows, the majority of which are distributed in the form of dividends and share buybacks.

Best Dividend Investing Articles For July 2018

For your reading enjoyment, I have highlighted several articles that the readers found of particular interest this month. I have included the article title, as well as a short description.

1) Introducing Dividend Growth Investor Newsletter
Last month, I created my own dividend investing newsletter. It features ten quality companies for the long-term each month. This newsletter features companies that I am investing in every single month. This dividend portfolio would be a great teaching exercise on building a portfolio from scratch. We would also discuss diversification, how to allocate new cash towards new or existing position and how to monitor and manage the portfolio. Subscribers of the newsletter received a report listing the ten dividend paying companies I bought last week.

2) Screening The Dividend Champions List For Bargains
I ran my screen against the list of dividend champions from June 2018, in order to identify bargains. The list of dividend champions includes companies that have managed to increase dividends to shareholders for at least 25 years in a row. The dividend champions list is more comprehensive than the list of dividend aristocrats, which is why I prefer to use it for my investing process. In this article, I discussed my approach to screening large groups of dividend growth stocks. Not surprisingly, I focus on qualitative and quantitative criteria to come up with a list of companies for further research.

3) Dividend Champions List For June 2018
I updated the list of dividend champions on June 30, 2018. I discussed the process I took to do the updates, which is mostly manual in nature. I discussed this in an effort to educate investors how to maintain their own lists if noone updates it for the community on a go forward basis. After going through the process of just updating the list of dividend champions, I have a lot of respect for the amount of work that David Fish did on a monthly basis for a decade, in updating the champions, contenders and challengers lists. He will be missed.

4) Three Dividend Growth Stocks Rewarding Shareholders With A Raise
In this article, I highlighted three dividend growth stocks with a ten year record of annual dividend increases. Those companies had raised dividends in the preceding week. I review the dividend increases that interest me, as part of my monitoring process. I own two of the three companies mentioned in the article, and recently added to my position in one of them.

5) How to retire in 10 years with dividend stocks
In this article, I shared a simple model for forecasting dividend income using a few simple inputs such as dividend yield, dividend growth and the impact of regular contributions to a dividend portfolio. While the future is seldom linear, this model gives at least a ballpark estimate of what can be expected if certain assumptions are made. When playing with models, I have found it very helpful to change assumptions, and see what the overall impact to the end result turns out to be. It is always helpful to stress test assumptions.

Relevant Articles:

- Best Dividend Investing Articles For June
- Dividend Investing Resources I Use
- Best Dividend Investing Articles For May
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Three Notable Dividend Increases To Consider

As part of my monitoring process, I review recent dividend increases. The process of identifying dividend increases is manual, because it relies on information coming from a list of multiple sources. I usually focus my attention on companies which have managed to increase dividends to shareholders for at least ten consecutive years. This is then followed by a brief review of trends in fundamentals and valuation. I like to compare the recent increase against the ten year average, and then try to discern whether that growth is supported by the business.

Over the past week, I noticed three companies with a ten year record of annual dividend increases. The companies include:

Illinois Tool Works Inc. (ITW) manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products.

The Board of Directors of Illinois Tool Works Inc. (ITW) increased the company’s quarterly dividend by 28.20 percent to $1.00 per share. This marked the 44th consecutive annual dividend increase for this dividend champion.

August 2018 Dividend Champions List

I took upon myself to update the list of dividend champions, after the untimely passing of David Fish two months ago. While there are other users updating the list, I find it helpful to be self-reliant, because I do not know how long they will keep updating it for. I use the list of dividend champions very often, which is why it is helpful to own the updates on my end, and then have a reliable source for my screening and monitoring process. I am not monitoring the list of dividend contenders and challengers at this time.

I use the streak of consecutive annual dividend increases, along with the historical rates of annual dividend growth. I sometimes even review the annual dividend payments going as far back as 1999, in order to verify whether the streak of annual dividend increases listed is accurate.

I discussed briefly the process I use to update the list of dividend champions in the last months update. By using a combination of data pulls from Yahoo Finance, references to my weekly reviews, and notification for companies that “should be raising their dividend” this time of the year, I was able to make some updates. This is a labor intensive process, and I find it hard to automate it.

I titled the last file June 2018 Dividend Champions, because it was as of June 29, 2018. Some readers believed that it was for June and not July. So to avoid any confusion, I will call this list August 2018 Dividend Champions list. The list shows updated information on the number of dividend champions as of July 31, 2018. Therefore, it shows the list of dividend champions for August 2018.

You can open the excel file from this location.

We have one new dividend champion added for this month.

Aptar Group (ATR) – after a 6.70% increase in the quarterly dividend to 32 cents/share. 25 years in a row.

We have no dividend champions removed however. Tenant (TNC) company is in jeopardy of being removed from the list of dividend champions, since it hasn’t raised distributions since 2016.

There were a few notable dividend increases over the past month from the list of dividend champions.
Those include the following companies, their ticker, the rate of most recent increase and consecutive streak of annual dividend increases.

Aqua America (WTR) – a 7% increase in its quarterly dividend to 21.90 cents/share. Aqua America has increased dividends for 26 years in a row.

Computer Services Inc. (CSVI) – a 16.10% increase in its quarterly dividend to 36 cents/share. Computer Services has raised dividends for 47 years in a row.

Medtronic (MDT) – a 8.70% increase in its quarterly dividend to 50 cents/share. It was announced in June. Medtronic has rewarded shareholders with annual raises for 41 years in a row.

Realty Income (O) – increase monthly dividend to 22 cents/share. Realty Income has increased dividends for 25 years in a row.

1st Source Corp. (SRCE) – a 4.20% increase in the quarterly dividend to 25 cents/share, which is the second this year. 31 years in a row.

Stanley Black & Decker (SWK) – a 4.80% raise in its quarterly dividend to 66 cents/share. The company is also a dividend king after raising dividends for 51 years in a row.

PPG Industries (PPG) – a 6.70% increase in its quarterly dividend to 48 cents/share. PPG Industries has raised dividends to shareholders for 47 years in a row

National Retail Properties (NNN) – a 5.30% increase in its quarterly dividend to 50 cents/share. National Retail Properties has a 29 year streak of consecutive annual dividend increases.

Relevant Articles:

- Dividend Champions List For June 2018
- Five Companies Committed to Increasing Returns To Shareholders
- Three Dividend Growth Stocks Rewarding Shareholders With A Raise
- Two Notable Dividend Increases To Consider
- Seven Dividend Paying Companies Rewarding Shareholders With A Raise