When considering which stocks to buy, it is crucial to adopt a long-term perspective. While some investors seek stocks that will appreciate in value over time, others value the consistent passive income generated by their investments. Starbucks (SBUX -1.75%) is a company that may appeal to those looking for stable dividends.
Starbucks, a leading coffee enterprise, has been consistently increasing its dividend since 2010, with a current yield of 2.9%. Despite this, the stock is currently down 37% from its peak price in July 2021, raising questions about its future performance.
In recent years, Starbucks has faced challenges in its stock performance. Although fiscal 2023 revenue showed a 24% increase from 2021, the company experienced a 16% drop in share price following the second-quarter 2024 financial update. This decline was mainly attributed to a 3% decrease in same-store sales in the U.S. and an 11% drop in China, reflecting a challenging operating environment.
Despite these setbacks, Starbucks has several positive qualities that long-term investors should consider. The company boasts a strong brand presence and consistently high gross margins. With nearly 39,000 locations worldwide and plans to expand to 55,000 by 2030, Starbucks has significant growth potential.
Although market expectations for Starbucks are currently low, this presents a buying opportunity for investors with a long-term view. The stock is trading at a historically low price-to-sales ratio, making it an attractive investment option. While there is no guarantee of a rapid increase in stock price, the company’s positive attributes suggest a promising outlook for investors in the long run.