Coffee stocks have been lucrative for investors. For instance, Starbucks (SBUX) has made millionaires since its initial public offering (IPO). The company had an IPO on June 26, 1992, and if $10,000 was invested, it bought about 588 shares. It is worth more than $4 million now after six splits without even considering the dividends.
However, Starbucks is not the only choice for investors. Today, there are many coffee stocks to choose from, including retailers, processors, and distributors. A few companies are focused mainly on coffee, like Starbucks. Other coffee companies have a business segment in a more extensive product portfolio, like Keurig Dr. Pepper (KDP). Finally, some companies produce and sell coffee as part of a giant conglomerate, like Nestle (NSRGY).
There is room for many companies in this $100 billion industry driven by consumers drinking 146+ billion cups of coffee annually. A handful of publicly traded companies make excellent investments at the appropriate valuation. In addition, there are several smaller coffee stocks. However, investors should be wary of many of these since they are often micro-caps with more significant risks and volatility. Lastly, there are many many privately-held coffee companies. For instance, Dunkin’ Donuts is now owned by a private equity firm.
In this article, we discuss publicly traded coffee stocks with dividends.
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Coffee Stocks with Dividends
Starbucks
Starbucks was founded in 1971 as a coffee bean store in Seattle, WA. Howard Schultz bought the company in 1987, rebranded his stores, and started to expand. Starbucks had an IPO in 1992. Today, Starbucks has about 40,576 stores and operates globally. Approximately 62% of stores are in the US and China, and Starbucks operates about 53% of the stores, and 478% are licensed.
Today, Starbucks sells coffee beans, ground coffee, coffee, coffee-based drinks, other drinks, pastries, breakfast food, and lunch food at its retail stores and licensed stores. The company also sells coffee beans and ground coffee at grocery stores through a partnership with Nestlé.
Starbucks, Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Principi are significant brands. The Starbucks brand is the No. 52 most valuable global brand.
Total revenue was around $34,271 million in the fiscal year 2024 and about $32,245 million in the last twelve months.
Starbucks sells the most coffee in the US and is thus the pre-eminent coffee stock. The company took an everyday drink and made it trendy and desirable. The combination of higher quality and attractive retail outlets allowed Starbucks to charge a premium for its coffee.
Starbucks paid its first dividend in 2010, and it has been raised yearly, making the stock a Dividend Contender. According to Portfolio Insight*, The forward dividend rate is $2.44 per share, giving a forward dividend yield of about 2.27%. This yield is above the 5-year average dividend yield of 2.15%. In addition, the dividend growth rate has been 9.3% in the past 5 years and 15.5% in the past decade.
The dividend is safe, too, with a payout ratio of approximately 70%. Free cash flow (FCF) was $3,318 million and more than covers the dividend requirement of $2,585 in fiscal 2024 million. These amounts give a dividend-to-FCF ratio of ~56%. Starbucks has a BBB+ / Baa1 lower-medium investment-grade credit rating.
Starbucks is trading at a forward price-to-earnings (P/E) ratio of ~36.2X, above its average range in the past 10 years.
Keurig Dr. Pepper
Keurig Dr. Pepper is not as well-known as Starbucks as a coffee stock. However, it is a significant player in the single-serve market. The company sells the Keurig single-serve coffee machines and K-Cup pods, which are very popular. Besides the two coffee brands of Keurig and Green Mountain, KDP owns Core, Dr. Pepper, Sunkist, Canada Dry, Bai, 7UP, Snapple Mott’s, Hawaiian Punch, and several others.
KDP resulted from the acquisition of Dr. Pepper Snapple by Keurig Green Mountain, owned by JAB Holdings, for almost $20 billion in 2018. The new company became the third-largest non-alcoholic beverage company in the United States. Privately held JAB Holdings owns ~21% of the shares. JAB Holdings also owns Peet’s Coffee, Caribou Coffee, Panera, a few other food chains that sell coffee, and the international rights to Maxwell House. However, the firm is not publicly traded on stock exchanges and thus cannot be considered a coffee stock to buy.
Total revenue was around $14,814 million in 2023 and $15,148 million in the last twelve months.
KDP does not have a long dividend history, although some of its predecessor companies do. The company has paid a dividend since 2019. The forward dividend yield is now ~2.87% based on a dividend rate of $0.92 per share. The 5-year dividend growth rate is about 7.8%.
The dividend safety metrics are conservative, with a payout ratio of approximately 46%. Annual free cash flow of ~$2,400 million was greater than the yearly dividend outflow of $1,142 million, giving a dividend-to-FCF ratio of ~48%. KDP has a BBB/Baa1 lower-medium investment-grade credit rating.
KDP is trading at a forward P/E ratio of ~16.8X, below its average in the past 5-years.
McDonald’s
The following coffee stock we discuss is McDonald’s (MCD). The company is well-known for its burgers and nuggets, but it is a major player in coffee. The Golden Arches reportedly sells more than one billion cups of coffee annually. Additionally, the company owns McCafé, a chain of coffee houses with more than 1,300 retail locations globally.
Besides McCafé, the company sells coffee in its 40,000+ McDonald’s stores worldwide. According to Interbrand, McDonald’s is the ninth most valuable brand globally. The combination of McCafé and McDonald’s stores makes the company a significant coffee stock.
Total revenue was around $25,494 million in 2023 and $25,938 million in the last twelve months. Systemwide sales were $129.5 billion in 2023. Approximately 60% of revenue is from franchise royalty fees and lease payments. McDonald’s owns 55% of the real estate and 80% of the buildings in its franchise system.
McDonald’s is known as a Dividend Aristocrat and Dividend Champion. The company has raised the dividend for 49 consecutive years. The forward dividend rate is $7.08 per share, and the dividend yield is 2.45%. This yield is above the 5-year average dividend yield of 2.31%. The dividend growth rate has been roughly 7.5%% in the past 5 years and a decade.
The dividend is safe, too, with a payout ratio of approximately 56%. Free cash flow was $7,255 million, more than covers the dividend requirement of $4,533 million. These values give a dividend-to-FCF ratio of ~62%. McDonald’s has a BBB+ / Baa1 lower-medium investment-grade credit rating.
McDonald’s is trading at a forward P/E ratio of ~24.5X, within its average range in the past 5- and 10-years.
J. M. Smucker
We now focus on a company known for its jams and jellies, J. M. Smucker (SJM). The 100+ year-old company still sells jams and jellies but has transformed into a pet food seller (36% of revenue) and coffee (33% of revenue) through acquisitions and divestments. The remainder of the total revenue is from peanut butter (10%), fruit spreads (5%), and frozen hand-held foods (5%).
Major coffee brands include Folgers, Café Bustelo, Dunkin’ Donuts, and 1850. Smuckers also owns Jif, Smucker’s, Crisco, Smucker’s Uncrustables, Meow Mix, Kibbles ‘n Bits, 9Lives, Nature’s Recipe, Milk-Bone, Pup-Peroni, Rachael Ray Nutrish, Natural Balance, Robin Hood, and Five Roses.
Total revenue was around $8,179 million in fiscal year 2024 and about $8,831 million in the last twelve months.
Smucker is another dividend growth stock on this list of coffee stocks. The company has raised its dividend for 28 years, making it a Dividend Champion. The forward dividend rate is $4.32 per share, and the dividend yield is 4.04%. The dividend growth rate has been 4.35% in the past 5-years and 5.78% in the past decade.
The dividend is safe, too, with a payout ratio of around 43%. Free cash flow was about $643 million and more than covers the annual dividend payment of $438 million. These values give a dividend-to-FCF ratio of ~68%. Smucker has a BBB / Baa2 lower-medium investment-grade credit rating.
Smucker is trading at a forward P/E ratio of ~10.8X, well below its average range in the past five and ten years.
Restaurant Brands International
The next coffee stock is Restaurant Brands International (QSR). The company was formed from several acquisitions and mergers orchestrated by the private equity firm 3G Capital, which owns 30%. Today, the company owns Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs. QSR has 30,000+ locations in 120 countries.
It is the Tim Hortons brand that makes QSR a coffee stock. The brand is omnipresent in Canada and sells coffee, donuts, and fast food. Tim Hortons sells even more coffee than Starbucks in Canada and has a 54% market share of branded coffee.
Total revenue was around $7,022 million in 2023 and $7,930 in the last twelve months.
QSR has an excellent forward dividend yield of ~3.77%. The forward dividend rate is $2.32 per share. The dividend has been increased for 12 straight years. The dividend growth rate has been 7.7% in the past 5-years and 25.5% in the trailing ten years.
The dividend safety metrics are concerning, though. First, the payout ratio is high at about 70%. The FCF was about $1,203 million and more than covers the dividend payment of $990 million, with a dividend-to-FCF ratio of ~82%.
Investors should be cautious of the significant amount of debt on the balance sheet with a 5.93X leverage ratio and low interest coverage. QSR has a BB non-investment grade credit rating.
QSR is trading at a forward P/E ratio of ~18.5X, within its average range in the past 10 years.
Kraft Heinz
Kraft Heinz is a company known by almost every consumer for cheese, ketchup, and mustard. In addition, Kraft Heinz is a coffee stock. Kraft Heinz owns the US rights to Maxwell House. JAB Holdings, another coffee stock, has international rights to Maxwell House. The company also owns Gevalia and Ethical Bean Coffee.
Besides coffee, Kraft Heinz owns many well-known brands, including Kraft, Heinz, Oscar Meyer, Velveeta, Philadelphia, Lunchables, Cracker Barrel, Jell-O, Kool-Aid, etc.
Interestingly, Kraft Heinz is the second company controlled by 3G Capital on this list. However, according to Warren Buffett’s annual shareholder letter, Berkshire Hathaway (BRK.A, BRK.B) owns about 26.6% of Kraft Heinz carried at a $13.1 billion valuation. In addition, 3G Capital has been selling shares since 2016. The private equity firm sold its remaining shares at the end of 2023, quietly exiting the investment.
Total revenue was around $26,640 million in 2023 and $26,130 in the last twelve months.
Kraft Heinz has the highest dividend yield of the coffee stocks at 5.36%. However, the forward dividend rate is $1.60 per share, held constant since 2019 after being cut from $2.50 per share.
However, the lower dividend rate has improved the dividend safety metrics. The payout ratio is now about 53%. The FCF was about $2,963 million and covers the annual dividend payment of $1,965 million, with a dividend-to-FCF ratio of roughly 66%.
The dividend was cut to allow Kraft Heinz to deleverage. The total debt has fallen, but the leverage ratio is still ~2.6X, and interest coverage is low. The company has a BBB-/Baa3 lower-medium investment-grade credit rating, one notch above non-investment grade.
Kraft Heinz is trading at a forward P/E ratio of ~9.9X, below its average range in the past 5- and 10-years.
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Nestlé S.A. ADR
The last coffee stock we discuss is Nestlé S.A. ADR (NSRGY), the European food giant. The company is the largest coffee stock on this list in terms of revenue and market capitalization. Nestlé operates in about 200 countries.
Nestlé was founded in 1866. Today, it is the largest global consumer staples company in the world. The company is known for its candy brands, baby foods, bottled water, cereals, ice cream, etc. The conglomerate also owns about 24% of L’Oréal.
In addition, the company is a major player in coffee, owning Nescafé, Nespresso, Dolce Gusto, and Blue Bottle. It has also licensed Starbucks to sell at grocery stores and other retail outlets. Nescafé has an 80-year history, and Nespresso is single-serve coffee.
Total revenue was around $92,998 million in 2023 and $91,750 million in the past twelve months.
Nestlé’s forward dividend rate is $3.28 per share, which gives it a dividend yield of 3.86%. Like many European companies, Nestlé pays a dividend annually and has done so since at least 1959. The dividend has trended up with time but not consistently because of the effects of the exchange rate.
The payout ratio is approximately 60%, but it fluctuates yearly. The FCF was $10,227 million in 2023 and covered the dividend requirement of $7,829 million. Nestlé’s balance sheet is conservative with an AA- / Aa3 high-grade investment credit rating.
Nestlé is trading at a forward P/E ratio of ~16.4X, above its average range in the past 10 years. According to StockRover*, the stock has a low beta of 0.10 relative to the S&P 500 Index, making it a good counterweight.
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Final Thoughts on Invest in Coffee Stocks
Coffee stocks have proven lucrative to many investors. Both Starbucks and McDonald’s are leaders in retail sales, return cash to investors, and increase their dividends annually. Investors should also take a deeper look at KDP and Nestlé; both are market leaders in the single-serve market. Other coffee stocks are somewhat less desirable but could be a good buy at the proper valuation and lower total debt.
Disclosure: Long SBUX, KDP, and MCD
List of Coffee Stocks
Stock Rover* and Portfolio Insight* were used to create this table.
| Ticker | Company | Dividend Yield | EPS 5-Year Avg (%) | Dividend 5-Year Avg (%) | Dividend 10-Year Avg (%) | Payout Ratio | Price / Earnings | Cap ($M USD) |
|---|---|---|---|---|---|---|---|---|
| KDP | Keurig Dr Pepper | 2.80% | 13.50% | 8.90% | -7.10% | 52.70% | 19.7 | $44,630 |
| KHC | Kraft Heinz | 5.40% | -6.80% | 0.00% | -0.60% | 141.60% | 26.6 | $35,645 |
| MCD | McDonald's | 2.40% | 7.60% | 7.20% | 7.60% | 58.40% | 25.4 | $207,547 |
| NSRGY | Nestle | 3.80% | -0.10% | 6.20% | 3.10% | 70.00% | 18.1 | $221,033 |
| QSR | Restaurant Brands Intl | 3.80% | 11.00% | 3.00% | 18.10% | 56.70% | 15.5 | $20,022 |
| SBUX | Starbucks | 2.30% | 0.30% | 8.30% | 14.30% | 74.60% | 34.7 | $122,351 |
| SJM | JM Smucker | 4.10% | -2.00% | 4.20% | 5.40% | 86.10% | 21.5 | $11,329 |
Dividend Calendar for Coffee Stocks
Stock Rover* was used for creating this table.
| Ticker | Company | Ex-Dividend Date | Dividend Record Date | Dividend Payment Date | Dividend Frequency | Next Dividend Payment Per Share | Dividend Per Share | Dividend Yield |
|---|---|---|---|---|---|---|---|---|
| KDP | Keurig Dr Pepper | 1/3/25 | 1/3/25 | 1/17/25 | 4 | $0.23 | $0.92 | 2.80% |
| KHC | Kraft Heinz | 11/29/24 | 11/29/24 | 12/27/24 | 4 | $0.40 | $1.60 | 5.40% |
| MCD | McDonald's | 12/2/24 | 12/2/24 | 12/16/24 | 4 | $1.77 | $7.08 | 2.40% |
| NSRGY | Nestle | 4/22/24 | 4/23/24 | 5/31/24 | 1 | $3.28 | $3.28 | 3.80% |
| QSR | Restaurant Brands Intl | 12/20/24 | 12/20/24 | 1/3/25 | 4 | $0.58 | $2.32 | 3.80% |
| SBUX | Starbucks | 2/14/25 | 2/14/25 | 2/28/25 | 4 | $0.61 | $2.44 | 2.30% |
| SJM | JM Smucker | 2/14/25 | 2/14/25 | 3/3/25 | 4 | $1.08 | $4.32 | 4.10% |
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.
Hi,
Took a chance and highlighted your stock ideas in a top 10 video:
https://www.youtube.com/watch?v=Xhe9Wh6DuRI&t=332s
Thank you for highlighting my pick and article.