Starbucks Direct Stock Purchase Plan (DSPP)
Direct Stock Purchase Plan (DSPP) enables investors to purchase Starbucks shares directly from the company and at a price that is subject only to daily fluctuations in the market prices. In short, the Direct Stock Purchase Plan in Starbucks is a plan that allows investors to purchase shares of Starbucks directly from the corporation. In broad terms, DSPP not only gives individuals an opportunity to accumulate shares but also gives companies a means of freeing money from the hands of institutional investors who want to hold shares for a long period of time. In this article, we will detail about Starbucks Direct Stock Purchase Plan.
About Starbucks
Starbucks is an American company and the largest coffee shop chain in the world. The company’s headquarters is situated in Seattle, Washington, in the United States. Starbucks has grown to become an international company with more than 30,000 stores globally. Nowadays, the company is considered a global coffee powerhouse and a prominent worldwide brand. Starbucks has a growing presence in the consumer market and is highly regarded for its products, quality coffee beans, and for introducing revolutionary coffee shop concepts and designs all over the world.
History of Starbucks
Starbucks was originally founded as a small coffee bean and tea business in Seattle, Washington, by three partners, namely; Jerry Baldwin, Zev Siegl, and Gordon Bowker. The company commenced its operations in 1971. The first store, which is also considered the company’s original store, was named ‘Pike Place Coffee’. In years to come, Starbucks has expanded to become the largest coffee shop chain worldwide. Therefore, Starbucks has become a strong presence in the U.S. and in many other countries of the world as well.
Starbucks Today
Today, the company is considered to be one of the most popular coffee shops in the world. Starbucks has made its way to the hearts of millions of consumers due to the quality coffee products and beverages that the company offers. The company has also gained worldwide attention for offering unique, stylish, and comfy coffee shops with a great seating capacity. The market capitalization of the company is around $107.03 billion. In addition, the company’s revenue figures stand at $7.6 billion at Q2 of 2022.
Starbucks direct stock purchase plan
As discussed above, the DSPP is a program that enables investors to purchase shares of Starbucks directly from the corporation. This is a plan that allows individuals as well as companies to buy stocks in the corporation without requiring them to pay any commission. Furthermore, investors can purchase shares of the corporation at a price that is solely based on the daily changes in market prices.
What is a direct stock purchase plan?
Direct Stock Purchase Plan (DSPP) is a procedure that enables investors to purchase stocks of the company directly from the corporation. The elimination of brokers in a direct stock purchase plan allows the investors to save on commission charges.
How does a direct stock purchase plan work?
A direct stock purchase plan works in a very simple manner. A DSPP permits buyers to set up an account wherein to make deposits for the reason of buying stocks directly from a given company. In simple words, when a customer purchases stocks through the plan, it means that the customer has deposited money in the business’ share account with the aim of buying stocks.
The deposit is made directly to the corporation, and no third parties are involved. Thus, it’s basically a plan that allows one to acquire stocks on behalf of the company without any third party (e.g., brokers) involved.
This is one of the most popular methods that are used for the purpose of buying stocks. Now, let us discuss some of the pros and cons of direct stock purchase plans:
Pros
- Cost-saving – Unlike mutual funds and other financial products that require you to pay an advisory commission or broker’s fee every time you want to make a transaction, direct stock purchase plans offer investors a chance to invest without paying any commission. This may be a small amount, but it is surely a cost-saving opportunity when financially planning for the future.
- Simple purchase experience – While setting up the account through which you wish to purchase stocks is not simple, the process of purchasing shares of a company through a direct stock purchase plan is simpler than buying shares in the open market. With DSPP, you do not have to go through brokers and other middlemen. Also, there is no need to adhere to any strict rules that are associated with trading stocks in the real market. With DSPP, all you have to do is make a deposit into your account with the aim of buying stocks.
- Better investor relations – One of the main reasons why many companies provide this plan to investors is due to better investor relations. When a company provides its investors with an opportunity of purchasing stocks through direct stock purchase plans, it shows that the company is concerned with the well-being of the investors. Companies believe that investors are more likely to be loyal and promote their brand if they are treated well during their stock purchases. Therefore, companies conduct direct stock purchase plans in order to ensure that they maintain better investor relations.
- Prevent short-selling – Investors like the fact that this plan allows them to avoid short-selling. When an investor purchases stocks in the market, he/she may end up selling them before they actually receive the certificates. This is known as a short sale, and it can lead to substantial losses if you do not have proper information about the stocks that you are purchasing.
Cons
- Transactional fees – Transactional costs are defined as the costs associated with making transactions. Companies that offer direct stock purchase plans usually charge investors a flat fee per transaction. Therefore, you may end up paying an amount just for making transactions through their direct stock purchase plans. However, there are companies that offer free transactions at no cost to the members of their accounts.
- Limited trading options – The trading options of the direct stock purchase plan are very limited. When you buy or sell stocks through a DSPP, you usually do not get the options associated with trading in the real market. This can be problematic for those who wish to take advantage of potential profits by buying and selling stocks in the market at certain times.
- Diversifications – Similar to other investment products, direct stock purchase plans do not allow investors to diversify their investments. With other types of investments such as mutual funds, you may invest all your money into only one single security, known as a diversified portfolio. However, when it comes to DSPP, your money is invested in one account at a time. This makes it difficult to spread your investment over multiple shares.
- Uncertainty – Since you are purchasing stocks directly from a company, there are uncertainties regarding the company’s performance in the future, which you do not experience in other investments such as mutual funds. If you purchase stocks of a company that does not perform, it is possible for you to lose all of your investment through a direct stock purchase plan. This is something that investors have to consider before making any decision to purchase stocks directly from the corporation.
How does Starbucks direct stock purchase plan work?
If you are aware of the stock purchase plan of the ubiquitous coffee house company, you would know that Starbucks sells its shares through a DSPP. In order to purchase stocks of Starbucks, you simply have to purchase them through the company’s website and make a deposit into the company’s share account.
You can participate in the direct stock purchase plan of Starbucks through a monthly installment program or an easily-accessible pay-per-purchase option that allows you to choose from a variety of predefined intervals. Moving to the benefits of direct stock purchase plans and advantages of investing in Starbucks.
Importance of investing in Starbucks
When you purchase Starbucks stocks through the company’s DSPP, you will be able to take advantage of the following:
- Branding power – The Company’s brand is well-known in the United States and around the world. This means that you will be investing your money in a company that has been growing with time and is known to have a bright future. It is also important to note that investing in well-known brands will help increase your reputation and help you improve your personal brand.
- Ethically sourced ingredients – Starbucks is known for its high-quality coffee and its green initiatives. If you choose to purchase stocks of Starbucks, you can be assured that the coffee that you purchase from the company is ethically sourced. This will not only give you an opportunity to make money as an investor, but it will also help the environment and society as a whole.
- Corporate Social Responsibility – Starbucks believes in creating a better environment for the people and animals that surround it. This is why the company applies to its employees by providing them with benefits such as healthcare and education. This, in turn, improves their performance in the company and provides them with an opportunity to make more money. You will be able to benefit from this within the framework of your direct stock purchase plan.
How to buy Starbucks stock (SUBX)?
If you want to know how to buy Starbucks stocks, you can do so by purchasing the company’s stocks through a DSPP. How to invest in SUBX? Just like any other stock, Starbucks stock can be purchased in different forms. Here are some of the most common options:
- Buy directly from the company – Starbucks stock can be purchased directly from the company by placing an order on their website. As mentioned above, you can enroll in the DSPP and make monthly purchases of the stocks of Starbucks through their direct stock purchase plan. You can also choose to make a lump-sum payment with which you will be able to buy the stocks directly.
- Types of Starbucks stock – If you are looking forward to purchasing Starbucks shares, you will have the option of purchasing them in different forms that include:
- Cash dividend – It means that you are buying a specific stock that will be paid out of the company’s earnings. You will receive cash dividend payments within the payment intervals that you have chosen during the enrollment phase. This is an effective way to improve your portfolio with Starbucks stock.
- Dividend reinvestment plan – This is an option that allows you to buy more stocks of the company and increase your holdings. The money that Starbucks pays as dividends will be used to purchase more stocks of the company, which will be held in your name.
- Tax implications – Investing in Starbucks stock presents a number of tax implications. It is a taxable investment for you, which means that the money that you invest in Starbucks will be taxed by the Internal Revenue Service as income.
- Find a broker – When you decide to purchase Starbucks stocks through a direct stock purchase plan, you may have to find the right broker. In order to do so, you will have to conduct thorough research of the available brokers and their conditions.
- Place an order or enroll – If you are currently an associated shareholder of record, you may access your account and enroll online in the BuyDirect Plan. This means that placing an order or enrolment will be available to you.
- Understand shareholders rights – As a shareholder of record, you should know your rights and responsibilities as an investor. It is important to understand the rights of stockholders, which may include voting rights and dividend issuance.
- Track your position – When you purchase Starbucks stocks through a direct stock purchase plan, you have to track your position. This will allow you to keep up with the activity of the stocks in your accounts, which will also help you make more informed decisions regarding your investments.
Manage your stocks efficiently with Eqvista!
Direct stock purchase plans are becoming increasingly popular among investors and corporations alike. The ability to buy stocks directly from corporations such as Starbucks may be a tempting way to make money and invest in companies that you like. However, it is important to consider the downsides of direct stock purchase plans before investing your hard-earned cash in them. Get in touch with Eqvista to help you manage stocks. Contact us today!
