I've long held the theory that all coffee should be ordered in three words or fewer. Small black coffee. Tall soy latte. Double-shot espresso. Like most things in life, I like my coffee low-maintenance. But because I like my stocks high-performing, I'm looking at dividend-paying coffee stocks to see which are sweet, and which will leave you with a bitter aftertaste.
Java Joes and Jills
According to the National Coffee Association, whose meetings no doubt have the best pastries ever, 40% of 18- to 24-year-olds, and 54% of 25- to 39-year-olds, drink coffee daily. That's an increase of approximately 10% for each age group. Nearly a third of the 18-to-39 group said they feel better about their financial situation than this time last year. And that bodes well for the gourmet-coffee industry, whose lattes have often been cited as the poster child for financial decadence.
The saucy siren from Seattle
Remember the days when people thought no one in his right mind would pay $4 for a cup of coffee? Those days have come and gone, Fools. Starbucks
Starbucks also reported a 25% revenue increase from this time last year, and a 20% increase in operating margin. The recent purchase of all retail operations in Switzerland and Austria is just part of the company's aggressive growth strategies.
When CEO Howard Schultz returned in 2009, gross margin made a staggering jump from 19.2% to 55.8%. And Starbucks has kept it up; the figure currently sits at 58.3%. With a P/E of 25, Starbucks does look expensive compared with rival Caribou Coffee
Since its first dividend in April 2010, the company has paid out quarterly, increasing from $0.10 to $0.13. My Foolish colleague John Grgurich has called Starbucks one stock for the long haul. Buy.
In 2008, when other companies were reducing or eliminating their dividends, Kraft increased its payout, from $0.27 to $0.29. That was just the latest in a long line of increases; the dividend in 2002 was $0.13.
On the heels of its success with McCafe, McDonald's
Apparently thinking its customers deserve a break, McDonald's has paid a steady dividend since 1976; although the payout has gone from $1.52 in the 1980s to $0.61 for the current quarter, the dip is the result of several splits over the past few decades.
Apple fritter and dutchie
It may sound like the name of a '70s folk band, but "apple fritter" and "dutchie" were the two original products offered alongside Canadian Tim Hortons'
Don't stamp your passport just yet, though. The company's cash on hand is all over the map, ranging from $157 million in July 2010, to $574 million in January 2011, to a mere $96 million in July 2011. This inconsistency no doubt comes as a result of expansion; the company recently signed a deal to open 120 stores in the Persian Gulf. It's a risky move, given that the company recently closed 36 restaurants and 18 kiosks in New England. Its long-term debt also makes me nervous; it's increased from $237 million in July 2010 to $346 million in July 2011. This is definitely a caffeine-crash stock, Fools. Wait for the buzz to wear off before taking a second look.
Whether you like your coffee complicated or simple, in three words or fewer or more than a dozen, you're not alone. Nearly half of all Americans have a coffee habit, and it doesn't look as though they'll break it anytime soon. In the meantime, sit back, enjoy a cup, and wait for the returns to roll in.
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Fool contributor Molly McCluskey owns no shares in any of the companies mentioned. The Motley Fool owns shares of Starbucks. Motley Fool newsletter services have recommended buying shares of Tim Hortons, McDonald's, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.