I'm calling it now: Starbucks is going to have to cut that dividend, probably before the year is out when they typically announce changes in October.

Look, I own shares and it pains me to say this, but the math just doesn't work anymore. For 15 years straight, Starbucks couldn't stop growing that payout. Started with a measly $0.05 per share back in 2010 right after the recession, and by 2025 it had exploded by over 1,100%. Anyone who threw down $1,000 when dividends first started was pulling in 28% annual yield on cost. That's the kind of income story that kept people holding.

But here's what's changed. From 2010 to 2020, they were hiking dividends by an average of 24.5% every single year. Unstoppable. Then 2021 hit and the brakes came on hard. The growth just kept slowing: 8.9% in 2021, down to 8.2% in 2022, then 7.5%, then 7%. By 2025? Just 1.6%. That's basically flat.

Now, a slowdown by itself doesn't necessarily mean disaster. But what's happening underneath is genuinely worrying. The payout ratio has blown past 200%. Think about that for a second—the company is spending more than double what it actually earns as net income just to pay the dividend. They're literally paying out money they don't have.

It gets worse when you look at cash flow. Operating cash flow has dropped from roughly $5.6 billion a year ago to just under $4.3 billion now. That's a significant hit. And here's the thing that really shows the squeeze: Starbucks stopped doing share buybacks in 2024. CEO Howard Schultz actually suspended the program back in 2022, saying the cash was needed for operations. Meanwhile, their employee stock purchase plan is actually adding shares and diluting the stock price. It's death by a thousand cuts.

The reason a dividend cut would hit so hard is that buybacks don't carry the same prestige. There's no such thing as "Buyback Aristocrats" or "Repurchase Kings." Dividends are what income investors get emotional about. A slash to that payout would sting way more than suspending buybacks ever did.

Now, could CEO Brian Niccol pull off a turnaround? Maybe. The guy's got a track record. But even if he does, I'd expect shares to take some real pain in the near term before things get better. For anyone chasing dividend income, this is probably one to sit out right now.