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The Motley Fool Take: Starbucks

If you’re looking for a dividend-paying stock with solid growth potential, consider the company behind that pricey cup of coffee you’re drinking. There’s a lot to like about Starbucks (Nasdaq: SBUX).

For starters, it boasts more than 26,000 stores worldwide and opened 575 net new ones in just the last quarter, aiming for 37,000 stores by 2021. Its Starbucks Rewards membership tops 13 million and is still growing, and the Starbucks mobile app has been very successful, too, with about a quarter of orders being placed or paid for via the app. The company has been expanding its offerings, aiming to sell more food products and packaged goods in addition to coffee.

Meanwhile, Starbucks has great growth potential abroad, and is targeting population rich China, among other locations. There were recently 2,800 locations in 130 cities in mainland China. Overall, Starbucks’ revenue and earnings have been growing by double-digit rates annually, on average, over the past five years, and annual revenue tops $20 billion.

Remember that dividend? It recently yielded 1.8 percent, and it has been increased more than threefold over the past five years. Starbucks’ price-to-earnings (P/E) ratio recently near 28 may seem steep, but it’s reasonable for such a growing company, and it’s lower than it has been in much of the past decade. (The Motley Fool has recommended and owns shares of Starbucks.) ¦





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