Starbucks Hikes Dividend, Reclaims Key Support Levels


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In reporting its latest quarterly results, Starbucks ( SBUX ) has hiked its dividend and done some repair work on its stock chart.

The coffee giant boosted its quarterly payout to 21 cents a share, up from 17 cents. That provides an annualized dividend yield of about 1.6%.

That's a rather modest payout, but IBD's stance has long been that investors should seek dividend-paying stocks that also are showing strong growth and a potential for price appreciation.

Starbucks generally fits that description. It has an EPS Rating of 92, putting it in the top 8 percentile.

Since late 2009, the Seattle-based company has achieved at least double-digit percentage growth in EPS in 13 out of 14 quarters, with one flat result a year ago marring the record.

Starbucks also sports a solid EPS Stability Factor of 8, not far from the steadiest-possible level of 0.

In terms of chart action, Starbucks scored a big gain Friday, powered by its fiscal fourth-quarter earnings report that came out late Thursday.

With that gain, the stock reclaimed its 200-day moving average and climbed back above its 50-day moving average. It had been wallowing under those key support levels for about two weeks.

The stock is still about 16% below its April high and continues to work on its latest base.

Starbucks said late Thursday that Q4 earnings jumped 24% to 46 cents a share. That beat Wall Street's estimates and represented acceleration from Q3's 19% EPS growth.

Revenue increased 11% to $3.36 billion, just under forecasts, though same-store sales grew 6% and topped views. The company hiked its 2013 EPS guidance to $2.06 to $2.15, the midpoint above Wall Street's expectations for $2.13. It said it continues to aim for annual revenue growth of 10% to 13%.

Starbucks said key factors in Q4 were the "resiliency and relevance" of its U.S. retail business, as well as the company's expansion in Asia.

The company also noted that it has opened its 700th store in China, along with its first three stores in India.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: SBUX

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