Starbucks to pay first dividend, expands buyback
Starbucks announces cash dividend of 10 cents per share; new stock buyback program
In this Feb. 14, 2010 photo, a sign outside a Starbucks hangs over the Riverwalk with the Navarro Street bridge in the background in San Antonio, Texas. Starbucks plans to begin paying a 10-cents-per-share cash dividend to investors.(AP Photo/David Zalubowski)
Wednesday March 24, 2010, 9:50 am
CHICAGO (AP) -- Starbucks Corp. will begin paying a 10-cents-per-share cash dividend to investors, the coffee giant said Wednesday, signaling confidence that its ambitious turnaround effort has taken hold.
The Seattle company also said that its board of directors approved a plan to buy back 15 million shares -- in addition to the 6.3 million shares the company still has remaining authorization to buy under a previous effort.
"We are confident in the overall financial strength of our business and the strong cash flow it continues to generate," Chief Financial Officer Troy Alstead said in a statement.
Hit by the recession and its own rapid expansion, Starbucks began a retreat more than two years ago, shutting hundreds of locations and laying off thousands of workers to cut costs. At the same time, the company tried to make over its image, emphasizing some of its cheaper drinks and trying to add more local flair to some of its cookie-cutter locations.
The changes seem to be working. In 2009, Starbucks' profit climbed 24 percent and in the past year its share price has more than doubled.
Later Wednesday, Starbucks CEO Howard Schultz will update investors on its turnaround strategy and what's next for the jumbo brand.
Starbucks officials said the dividend will be first paid in cash to investors. It will be paid on April 23 to shareholders who own stock April 7.
Future dividends will need approval from company's board of directors. But executives said they hope future payouts will range from 35 to 40 percent of its net income.
Starbucks shares rose 29 cents, or 1.1 percent, to $25.70 in morning trading Wednesday.