Share price of Dr Pepper Snapple Group, Inc. (DPS) spiked 2.15% to $48.89, following the recent increase in its dividend rate.
The board of directors of Dr Pepper Snapple, a Texas-based beverage company, approved a 7.9% increase in its quarterly dividend late last week.
The quarterly dividend was increased from 38 cents to 41 cents per common share, equivalent to an annual dividend of $1.64 per share for fiscal 2014, up from $1.52 per share for fiscal 2013. The new dividend will yield 3.4% annually. The first quarterly dividend will be paid on Apr 4, 2014, to shareholders as of Mar 17, 2014.
Driving shareholders’ value, either through regular share repurchases or increased dividends, is Dr Pepper’s key objective. As of Sep 2013, the company returned $468 million to shareholders, of which $243 million was returned as share repurchases and $225 million as dividends. The company achieves this objective through its solid balance sheet and strong free cash flow. The company had $119 million of cash and cash equivalents as of Sep 30, 2013.
Dr Pepper Snapple will report its fourth quarter and full year 2013 financial results on Feb 12, 2013. The Zacks Consensus earnings estimate for the fourth quarter 2013 is 85 cents and revenue estimate is $1.48 billion.
For full-year 2013, Dr Pepper expects adjusted earnings per share in the range of $3.04 to $3.12, which is in line with the Zacks Consensus estimate of $3.09. However due to continued CSD category headwinds, Dr Pepper expects its 2013 sales to remain flat year over year, much below the company’s long-term targets.
The Zacks Consensus revenue estimate for full year 2013 is $6.01 billion. Sales volume is expected to decline around 2%. Price/mix is expected to be up about 2.5%.
Dr Pepper carries a Zacks Rank #4 (Sell). However, some better-ranked beverage stocks include The WhiteWave Foods Co. (WWAV), Monster Beverage Corp. (MNST) and Coca-Cola Enterprises Inc. (CCE). All the three companies carry a Zacks Rank #2 (Buy).