What Happened?
Shares of coffeehouse chain Starbucks (NASDAQ: SBUX) jumped 3.1% in the afternoon session after the company announced an increase to its quarterly dividend payment to stockholders.
The Board of Directors for the coffee retailer approved lifting its distribution to $0.62 per share from $0.61 previously. This change gave Starbucks an annual dividend payout of $2.48 per share. The dividend increase was announced amidst a period where the stock had been underperforming relative to the broader market. Despite the small size of the increase, the news was enough to send the shares higher. The increased dividend was made payable on November 28 to shareholders of record as of November 14.
After the initial pop the shares cooled down to $86.89, up 3% from previous close.
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What Is The Market Telling Us
Starbucks’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 10.7% on the news that President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10% or more.
Markets reacted negatively to the announcement, reflecting deep concerns among investors about the broader economic implications. The tariffs were likely seen as a significant threat to global trade flows, with the potential to slow economic growth, drive up consumer prices, and spark retaliatory measures.
Wedbush analyst Dan Ives captured the prevailing market anxiety, stating, "We would characterize this slate of tariffs as 'worse than the worst case scenario' the Street was fearing." His comment highlighted how the scope and severity of the tariffs far exceeded Wall Street's expectations, adding a new layer of uncertainty for businesses and investors.
Starbucks is down 5.7% since the beginning of the year, and at $86.89 per share, it is trading 25% below its 52-week high of $115.81 from February 2025. Investors who bought $1,000 worth of Starbucks’s shares 5 years ago would now be looking at an investment worth $1,004.
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