Keurig Dr Pepper Hikes Dividend by 7%: What's Ahead for Investors?
Keurig Dr Pepper Inc. KDP announced a raise in its quarterly dividend to 92 cents per share from the previous payout of 86 cents per share. Scheduled to be paid on Oct 11, 2024, to shareholders of record as of Sept. 27, 2024, this 7% hike underscores KDP’s commitment to boost the value of its shareholders via regular dividend payments and share repurchases.
The new payout makes Keurig Dr Pepper’s annualized dividend rate $3.68 per share, translating to an attractive yield of about 10% based on the stock price as of Thursday. The company had repurchased shares for $1.1 billion in first-half 2024. Such shareholder-friendly actions are required to attract long-term investors seeking consistent returns.
Dividend hikes and constant share repurchases not only maximize shareholders’ returns but also strengthen investors’ confidence in the company's financial health and stability. As of June 30, 2024, Keurig Dr Pepper’s cash and cash equivalents of $438 million, up 57.6% on a year-over-year basis. Net cash provided by operating activities totaled $742 million in first-half 2024, with a free cash flow of $470 million.
How is KDP Performing Now?
Continued brand strength and pricing actions have been aiding Keurig Dr Pepper’s performance for a while now. KDP’s consumer-centric innovation model, portfolio expansion into high-growth categories and robust route-to-market capabilities are encouraging. It has been experiencing strong market share gains across categories for a while now. Momentum in the Refreshment Beverages segment acts as a tailwind.
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The company announced a planned transaction with Kalil Bottling Company, an important step toward a route-to-market advantage. This transaction looks forward to granting the company complete control of the brands’ distribution in Arizona. This will reinforce its unique national direct-store-delivery capabilities and offer opportunities for advanced scale and brand building in a fast-growing region for beverages.
However, Keurig Dr Pepper is not immune to the cost pressures in transportation, warehousing, and labor and inflationary headwinds. A tough operating landscape with resilient demand is also a concern. KDP has been witnessing sluggishness in its coffee segment for a while now.
Despite such headwinds, shares of the energy drinks and alternative beverages marketer have appreciated 31% in the past six months compared with the industry’s 10.6% rise. The company has been working to maneuver the aforesaid challenges. The above-discussed strengths, along with the recent dividend hike, will continue boosting the Zacks Rank #3 (Hold) stock’s performance ahead.
Stocks to Consider
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CHEF has a trailing four-quarter earnings surprise of 33.7%, on average.
The Zacks Consensus Estimate for CHEF’s current financial-year sales and earnings per share (EPS) indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
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The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings implies growth of 1% and 4.2%, respectively, from the year-ago reported numbers.
Utz Brands Inc. UTZ, which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year EPS indicates growth of 28.1% from the year-ago reported number.
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Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
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Keurig Dr Pepper, Inc (KDP) : Free Stock Analysis Report
Utz Brands, Inc. (UTZ) : Free Stock Analysis Report