Starbucks shares rise on strong sales

starbucks dividend

Starbucks served up some encouragement to investors Thursday with quarterly results that showed strong sales growth.

The Seattle-based chain posted earnings close to analyst estimates. More reassuring was news that same-store sales rose 6%, and that the company increased its dividend from 17 cents to 21 cents a share.

Shares jumped 7% in after-hours trading, a different story from three months ago, when the company reported lackluster results that it attributed in part to global economic challenges.

"I think the market overreacted last quarter to a mild slowdown in U.S. stores that obscured the long-term potential of this business," said R.J. Hottovy, an analyst with Morningstar.

Starbucks CEO on opening in India
Starbucks CEO on opening in India

Starbucks (SBUX) is expanding aggressively internationally, with plans to open 600 new stores in the Asia-Pacific region during its 2013 fiscal year, including more than 300 in China. Last month, the company opened its first location in India as well.

In a conference call with analysts Thursday afternoon, Starbucks executives also touted expected holiday revenue from sales of the Verismo, the company's single-cup home-brewing machine, which could eat into sales of Keurig machines from competitor Green Mountain Coffee Roasters (GMCR).

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