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Keurig Dr Pepper: A Beverage Bargain?

06/24/2020 5:00 am EST

Focus: CONSUMER

John Dobosz

Editor, Forbes Premium Income Report & Forbes Dividend Investor

Burlington, Mass.-based Keurig Dr Pepper (KDP) is the seventh-largest company in the U.S. food and beverage sector, and the third-largest beverage company in North America, notes John Dobosz, income expert and editor of Forbes Dividend Investor.

It's coffee and non-alcoholic drink brands include Green Mountain Coffee Roasters, Canada Dry, Snapple, 7 Up, and Mott’s. 

Over the past 12 months, revenue totaled $11.23 billion, and sales grew 4.35% year-over-year in the most recent quarter. Earnings this year are expected to grow 17% to $1.22 per share, with revenue up 1.5% to $11.2 billion. 

Free cash flow per share of $1.28 easily covers $0.60 in annual dividends, and the ex-dividend date for the next $0.15 per share payout, although still undeclared, will be in during the first week of July. The next earnings report is in early August. 

Shares have recovered smartly from their nadir in March, and the stock is on the verge of being in the black for the year. Jefferies & Co. recently upgraded the stock to buy and gave it a price target of $36. Insider purchases are bullish. 

A company director recently bought $128,000 worth of company stock, and the president of international business development took down $3.5 million worth of KDP shares at $28.47 per share. 

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