Starbucks Corp declared its first dividend on Wednesday, signaling an end to its days of sizzling growth while ushering in a broader-based strategy aimed at more sustainable, stable prosperity.

Speaking at the company's annual shareholder meeting in Seattle, CEO Howard Schultz assured investors the dividend marked a reframing of its business strategy: from one based on new stores to one that draws from various revenue drivers.

Starbucks -- once prized for years of consecutive double-digit growth but which had to go through two years of painful cost cuts and store closures -- now intends to make billion-dollar businesses of Via instant coffee and Seattle's Best Coffee, its second coffee brand.

It is initially targeting a dividend payout range of 35 percent to 40 percent of net income, which analysts said was consistent with other restaurant companies including KFC, Taco Bell and Pizza Hut parent Yum Brands Inc .

The announcement of a dividend and a 35-40 percent payout ratio of net income puts an end to the Starbucks growth company, and begins in earnest the new phase of Starbucks the cash cow, said RBC Capital Markets analyst Larry Miller.

Schultz -- who slashed nearly $600 million in operating costs, closed around 900 cafes and put the brakes on rapid international expansion plans -- also said the company was ready to again expand its U.S. store base and restart international expansion. Those plans include adding 100 net new U.S. stores and 200 international cafes for the fiscal year ending September.

We have loads of opportunity to grow the company, but perhaps in a different way, Schultz said, adding that future growth would be more disciplined and healthy than the previous strategy that focused on opening new stores.

The dividend is our opportunity to reward our shareholders, he said.

While the dividend declaration in many ways marked the end of the company's days as a red-hot growth name, some analysts said Starbucks was not yet a stock for income-obsessed widows and orphans.

Oppenheimer analyst Matthew DiFrisco expects Starbucks to return to 5 percent to 10 percent aggregate top-line revenue growth, which he deems a relatively high rate for a large branded consumer name.

He added that Starbucks should see substantial gains in sales at established cafes as the economy recovers.

The company -- which Chief Financial Officer Troy Alstead said would significantly and rapidly grow shareholder returns in 2010 -- also announced plans to buy back 15 million common shares on top of 6.3 million shares remaining under previous authorizations.

Starbucks shares, which touched a 52-week high of $26 during the trading session, closed down 0.5 percent to $25.29.

Public companies use dividends to distribute a portion of profits to shareholders. Mature companies are most likely to offer dividends, since younger, fast-growing companies tend to steer business proceeds into expansion efforts.

Starbucks set a quarterly dividend of 10 cents per share. It will be paid on April 23 to shareholders of record at the close of business on April 7.

The 10-cent quarterly dividend was higher than the roughly 6-cent dividend payout Wall Street had expected, Bernstein restaurant analyst Sara Senatore said in a client note.

Schultz bought Starbucks Coffee Co in 1987 and transformed the small Seattle outfit into one of the world's most recognized brands. He was at the helm at the fast-growing company from 1987 to 2000 and remained a very active chairman.

Starbucks hit a wall in late 2007 as the U.S. economy slid into recession and Schultz returned as CEO in January 2008.

Starbucks, which also squeezed out waste at the store level, now expects to generate free cash flow of around $1 billion for the current fiscal year.

There were years when we didn't know if we could pay our bills...What a difference a year makes, Schultz told investors. We are more optimistic than ever about the future of the company.

For the latest quarter, the chain posted a 4 percent rise in U.S. same-store sales -- its first quarterly gain in sales at established domestic restaurants in two years.

Starbucks shares have gained more than 35 percent since Schultz returned, compared with nearly a 20 percent decline in the Standard & Poor's 500 Index <.SPX> over the same period.

I'm glad he's back, said annual meeting attendee Doris Cole, 80, who visits a Starbucks cafe nearly every day and has owned shares in the company since it went public in 1992.

(Reporting by Lisa Baertlein; additional reporting by Dhanya Skariachan in New York; editing by Michele Gershberg, Edwin Chan, Gerald E. McCormick, Leslie Gevirtz)

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