Invest in Coffee Stocks

Roberto Rivero

More than 2 billion cups of coffee are drunk every day, making it one of the world’s most popular drinks, as well as one of the most traded commodities on the planet. In this article, we will examine the prospect of investing in coffee, examine 2 top coffee stocks and much more!

Investing in Coffee

For many people, a morning cup of coffee borders on necessity, and is likely to be one of the last things trimmed from a budget.

Nevertheless, despite being a staple for many people, as with most commodities, coffee prices can be rather volatile. With agricultural commodities, such as coffee, this is partly due to the fact that they are only produced in certain countries, and their harvest is strongly dependent on good weather conditions.

For example, Brazil accounts for roughly 40% of the global supply of coffee. Consequently, if Brazil has a particularly bad - or particularly good - harvest, this can have an effect on global prices.

Yet coffee consumption is forecast to continue growing in the future, which means that companies operating in the industry could stand to benefit from increasing demand. So, for those feeling bullish on the industry, what are some of the best coffee stocks to watch in 2024?

Best Coffee Stocks to Watch

In the following sections, we will highlight two top coffee companies for those who are interested in investing in the industry to watch.

Top Coffee Stocks
Starbucks
Nestle

Starbucks

The United States by far has the largest coffee market in the world in terms of revenue, and Starbucks brews the nation’s favourite cup. But it’s not just the US where the coffee chain is popular.

Starbucks has more than 38,000 locations in 80 different countries and continues growing with little sign of slowing down. In the year ended 1 October 2023, Starbucks’ locations around the world increased by 2,327.

In the same year, Starbucks reported record net revenue of $36 billion and an operating income of $5.9 billion, year on year increases of 11.6% and 27.1% respectively.

As well as operating cafes around the world, Starbucks has also successfully tapped into the growing market of consumers who brew coffee at home through the sale of their bagged coffee beans.

In addition to delivering robust long-term growth historically, Starbucks is also a dividend paying coffee stock, with a trailing dividend yield of 2.5%.

Nestle

Nestle is a hugely diversified food and drink company, which has more than 2,000 brands across a number of categories, including coffee, baby food, chocolate, bottled water, frozen food and dairy products, to name a few.

Consequently, Nestle is more than just a coffee stock, representing a far more diversified option than Starbucks. Depending on the individual investor, this could be either a positive or a negative. For those exclusively looking to invest in coffee, Nestle may not be the best option, as coffee only accounts for a portion of its revenue. However, for those who are happy to sacrifice exposure to coffee for more diversification and, thus, potentially less risk, Nestle could fit the bill.

Nestle’s powdered & liquid beverage segment, of which coffee is a major component, is the company’s largest source of revenue. In terms of coffee, Nestle not only owns internationally renowned brands Nescafe and Nespresso, but also markets and distributes Starbucks’ packaged coffee, pods and ready-to-drink products around the world.

Nestle is also a company with a long and reliable history of paying dividends. The company has increased or maintained its annual dividend every year since 1959, with the stock currently yielding 3.1%.

How to Invest in Coffee Stocks

With an investing account from Admirals, it is possible to invest in both coffee stocks examined in this article. In order to learn how to invest in coffee stocks, follow these steps:

  1. Open an Invest.MT5 account with Admirals.
  2. Log in to the Dashboard.
  3. Open the web trading platform.
  4. Search for coffee stocks to invest in and click the symbol to open a chart.
  5. Press ‘Create New Order’, enter the number of coffee shares and click ‘Buy’!
Depicted: Admirals MetaTrader WebTraderStarbucks Corp. H1 Chart. Date Captured: 25 January 2024. Past performance is not a reliable indicator of future results.

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FAQ

How can I invest in coffee?

Besides buying the physical commodity, investors can gain exposure to coffee by buying shares in companies which operate in the industry. It is also possible to trade coffee using financial derivative products such as futures contracts and Contracts for Difference (CFDs).

How to buy shares in Costa Coffee?

Costa Coffee is a wholly owned subsidiary of The Coca-Cola Company, which acquired the coffee chain in 2019 for $4.9 billion. Consequently, it is not possible to buy shares in Costa Coffee. However, it is possible to gain exposure to the coffee company by buying shares in Coca-Cola.

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INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  • With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  • The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  • Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
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