Starbucks' Dividend Sustainability Amid Business Turnaround
Starbucks (NASDAQ:SBUX) reported strong Q2 fiscal year 2026 results, with revenue rising 8.79% to $9.531 billion and non-GAAP EPS beating estimates by 23%. CEO Brian Niccol raised full-year comparable-store sales guidance to over 5%, signaling progress in the company's 'Back to Starbucks' turnaround plan. However, concerns remain about the sustainability of its dividend. Free cash flow covered only 0.88x of the $0.62 quarterly payout in FY2025, down from 1.28x a year earlier. The stock currently yields around 2.4%, but with declining coverage and negative shareholders' equity, investors are watching closely for signs that dividend growth may slow. Management has prioritized the dividend over buybacks since suspending repurchases in FY2025. Analysts remain cautious, assigning a modest price target of $106.45, while traders on Polymarket predict a 92.5% chance of another earnings beat.
Tickers: $SBUX
Topics: comparable-store_sales dividend_sustainability revenue_growth turnaround_strategy