Understanding KDP's dividend history, yield, and growth rates
Keurig Dr Pepper Inc (KDP, Financial) recently announced a dividend of $0.22 per share, payable on 2023-10-13, with the ex-dividend date set for 2023-09-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Keurig Dr Pepper Inc's dividend performance and assess its sustainability.
Understanding Keurig Dr Pepper Inc's Business Model
Keurig Dr Pepper was established in 2018 following a merger between Keurig Green Mountain Coffee and Dr Pepper Snapple. The company manufactures and distributes coffee systems (including coffee brewers and single-serve coffee pods) under the Keurig and Green Mountain brands, as well as ready-to-drink beverages including flavored (non-cola) sparkling soft drinks under well-known brands such as Dr Pepper, Snapple, and Canada Dry. The company controls production and route to market for its own brands through in-house manufacturing plants and distribution infrastructure and leverages these facilities to manufacture and distribute for third-party coffee and beverage brands via licensing and partnership agreements. U.S. and Canada make up 95% of revenues, with the rest from Mexico.
Keurig Dr Pepper Inc's Dividend History
Keurig Dr Pepper Inc has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Keurig Dr Pepper Inc's Dividend Yield and Growth
As of today, Keurig Dr Pepper Inc currently has a 12-month trailing dividend yield of 2.52% and a 12-month forward dividend yield of 2.72%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Keurig Dr Pepper Inc's annual dividend growth rate was 8.90%. Extended to a five-year horizon, this rate decreased to -16.00% per year. And over the past decade, Keurig Dr Pepper Inc's annual dividends per share growth rate stands at -10.40%.
Based on Keurig Dr Pepper Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Keurig Dr Pepper Inc stock as of today is approximately 1.05%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Keurig Dr Pepper Inc's dividend payout ratio is 0.71. This may suggest that the company's dividend may not be sustainable.
Keurig Dr Pepper Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Keurig Dr Pepper Inc's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Keurig Dr Pepper Inc's Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Keurig Dr Pepper Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Keurig Dr Pepper Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Keurig Dr Pepper Inc's revenue has increased by approximately 7.90% per year on average, a rate that outperforms approximately 60.42% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Keurig Dr Pepper Inc's earnings increased by approximately 4.70% per year on average, a rate that outperforms approximately 46.59% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -14.90%, outperforms approximately 10.77% of global competitors.
Conclusion
Keurig Dr Pepper Inc's consistent dividend payment history, robust growth metrics, and high profitability rank suggest a promising outlook. However, the high payout ratio raises concerns about the sustainability of its dividends. Investors should monitor these factors closely and make informed decisions based on their risk tolerance and investment goals. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
