Jan 242013
 

In the US alone the entire coffee industry is valued at $20 billion a year.Β  In the quick service business, companies like Starbucks and Tim Hortons have suchΒ loyal customers that people are willing to sacrifice a part of their busy morning lives and wait in long lineups to get their cup of joe. In the past I couldn’t help but notice how many people I see everyday walking around with Starbucks coffee cups in their hands, and I thought hey if I were Starbucks, I could have just made some money from these folks. Well it’s time I stopped missing out. It is time to take action! So earlier today I bought 20 shares each of Tim Hortons and Starbucks πŸ˜€

2013_buy_sbux_thi

Starbucks for example had $13.3 billion in sales last year, from which they made $1.4 billion in profit. Out of that profit, they paid about $535 million to shareholders as dividends.

In other words, for every $4.00 cup of coffee they sell, it costs them about $3.60 to make, so they end up keeping about 40 cents as pure, after-tax profit. Makes good sense so far right? Out of this 40 cents, about 15 cents is paid to their shareholders (like myself) in cold hard cash (goes straight into my trading account) and the remaining 25 cents of the profit is used to further invest in the business such as establishing new locations, for example.

Starbucks has about 743 million shares in total, and I now have 20. Which means I own about 0.0000027% of the entire company :0) That means every time I see someone buying a cup of coffee (let’s say for $4) I know that they just gave me 0.0000004 cents in passive income (dividends,) or if I still remember how to do my scientific notations (4×10^-7) I know that doesn’t sound like much and I can’t really buy anything with 0.0000004 cents but think about all the billions of cups of coffee Starbucks serves around the world every year πŸ˜€ It all adds up! Anyone who buys just 1 stock of Starbucks today can expect to receive at least $.72 in dividends this year. Not to mention, Starbucks has a history of increasing dividends :0)

Starbucks dividend distribution history:

  • 2012 – $0.72 per share
  • 2011 – $0.63 per share
  • 2010 – $0.57 per share
  • 2009 – $0.51 per share
  • 2008 – $0.41 per share
  • 2007 – $0.38 per share

As you can see even during the great recession this company still managed to grow their business and give increasingly more dividends back to their owners. Starbucks is currently working on plans to open up another 3,000 stores in the Americas in the next 5 years, not to mention their other plans for the Asian markets. This tells me that their dividends are safe and their business outlook is strong, otherwise why would a company choose to expand if they don’t think they can get more sales? Think about how big Starbucks will become in 2020. That’s why I’m getting into the business now and holding it for the long term.

With three big names in the coffee service business all working for me I now collect altogether $155 a year in dividends from them πŸ˜€

if coffee is your daily grind you have 3 to choose from

To all those fabulous people who are regular customers of these fine franchises. Thank you so much for your business and for mocha me very happy οΌˆοΌΎοΌοΌΎοΌ‰Your continuous support will bring me one step closer to financial freedom.

Disclaimer: I have 40 shares of MCD, 20 shares of THI and 20 shares of SBUX πŸ™‚ Long all the stocks.

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Random Useless Fact: Despite living in Canada and even hosting the 2010 Winter Olympics, Vancouverites are notoriously bad for driving in the snow for some reason.coffee can give you the energy to drive to work