Investors thirsty for a globally diversified dividend-payer with a long growth runway in developing and emerging markets should invest in Starbucks (SBUX:NASDAQ).

The coffee roaster and retailer has operations in more than 80 markets led by the US and its second biggest market, China.

Even if China’s post-Covid reopening fails to generate the hoped-for earnings boost, Starbucks offers investors exposure to markets ranging from Turkey and Korea to populous Indonesia and rapidly growing India, the latter in a joint venture with Tata Group, where it is attracting value-conscious consumers with smaller, cheaper beverages.

Furthermore, former Reckitt (RKT) boss Laxman Narasimhan assumed the CEO role in March and is certainly full of beans, seeing ‘limitless possibilities’ ahead for Starbucks. This optimism isn’t reflected in a price to earnings ratio of 24.7 based on 2024 earnings forecasts, which is inexpensive relative to Starbucks’ own history.

The company has more than 36,000 stores worldwide and is leveraging its global scale while also driving digital sales and capitalising on the lockdowns-induced demise of many independent coffee shops.

Given the addictive nature of caffeine, Starbucks should be a reasonably safe haven for tough economic times ahead. Its customers around the world are hooked on the company’s Americanos and cappuccinos.

Starbucks continues to recruit customers to its loyalty programmes, while its stores have evolved into gathering places where shoppers and commuters go to collect their daily caffeine fix or socialise or work.

Its sales increased 14% to $8.7 billion in the second quarter to 2 April 2023, with US like-for-like store sales up 12% and international like-for-like store sales increased by 7%, though admittedly, the 3% growth in China comparable store sales was muted as the reopening of the Middle Kingdom hasn’t been as strong as hoped.

Narasimhan certainly sounded excited about Starbucks’ potential when introducing his first set of quarterly results in May, commenting: ‘As we strive to continue to be a different kind of company, we will unlock our limitless possibilities to meet the needs of today and, importantly, the future of Starbucks.’ Further bullish outlook commentary when Starbucks serves up third quarter earnings on 1 August could boost the share price.

Consensus forecasts point to net profits of $3.95 billion for the year to 2 October 2023 on sales of $36 billion, translating into earnings per share of $3.40 and a $2.10 per share dividend. For full year 2024, Starbucks’ profits are forecast to hit $4.64 billion on $40.2 billion of sales, for earnings per share of $4.10 and a $2.30 dividend.

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