What do you do when a stock you've held for 5 years starts paying out more money than it makes? That's exactly what happened with my Starbucks (SBUX) investment.

My very first Starbucks share cost me $83.72 back in November 2019. That share has paid me $11.22 in dividends for a total return of 19% - pretty bad when the boring old S&P 500 had a total return of 119% over the same time!

Some of the main reasons for selling after their Q325 Earnings:

Their dividend payout jumped from 75% to 137% of free cash flow - they're paying out more than they actually make
Sales at existing stores have dropped for six straight quarters
Operating cash flow fell from $4.6 billion to $3.4 billion in one year
They earned 50 cents per share vs Wall Street's expectation of 65 cents
They're losing money in China due to price competition and considering selling the China business
Management can't even predict what will happen this year
They're spending big on CEO Brian Niccol's "Back to Starbucks" turnaround plan with no guarantee it'll work

Someone commented that I forgot Starbucks is basically a bank because of their $1.9 billion in gift card money. That's true - it's like free money they can use. But they still have $14 billion in debt, so even if every gift card got used tomorrow, it would only cover 13% of what they owe.

Heck, it wouldn't even cover their current debt payments of $2.9 billion!

The bottom line? The business keeps getting worse, the dividend could get cut, and my only reason for holding was 'people still buy coffee there.' That's not good enough anymore.

We went a little bit deeper in the current fundamental analysis in the YouTube video.

If you have bought or sold Starbucks or you think I'm just wrong, I'd love to hear it.

Hit reply — I read and reply to every message!

Disclaimer: This is not investment advice, just one person's opinion that may be incorrect. Do your own research before making any investment decisions.

😁THANK YOU to all who responded to the last newsletter!!

Check out the portfolio on Blossom, the podcast, or see what’s cooking on YouTube.

And now, here is this week's portfolio activity...

Dividends Received This Week ~$0

none.😔

Dividends Received Year to Date (Schwab Only)~

$3,409.15

Stocks Bought (AVERAGE)

20 Zoetis (ZTS) | $148.05
1 Global X MLP & Energy ETF (MLPX) | $61.75
30 Schwab International Dividend ETF (SCHY) | $26.99

Stocks Sold (AVERAGE)

80 Starbucks (SBUX) | $93.47
5 Nike (NKE) | $76.52

Notable Ex-Dividends This Week + SSD Score

8/8 J.B. Hunt Transport Services (JBHT), 1.26% | 89VS
8/8 Olin Corp (OLN), 4.39% | 60BS
8/8 Energy Transfer (ET), 7.42% | 50BS
8/8 Main Street Capital (MAIN), 4.78% | 62S

🎙️Podcast of the week🎙️

Time To Sell These Dividend...

Jul 31 · The Deep End

77:51

Ryne and Ari chat about some dividend stocks that are feeling the pressure and if it might be time to move on from them.

🎦If you missed it, why I sold Starbucks and all the recent portfolio activity from the month that was.

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