If you are interested in cashing in on Dr Pepper Snapple Group Inc’s (NYSE:DPS) upcoming dividend of $0.58 per share, you only have 3 days left to buy the shares before its ex-dividend date, 13 December 2017, in time for dividends payable on the 04 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into DPS’s latest financial data to analyse its dividend attributes. See our latest analysis for DPS
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share amount increased over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it be able to continue to payout at the current rate in the future?
How does Dr Pepper Snapple Group fare?
The current payout ratio for the stock is 56.63%, which means that the dividend is covered by earnings. Going forward, analysts expect DPS’s payout to remain around the same level at 52.57% of its earnings, which leads to a dividend yield of 2.62%. Moreover, EPS should increase to $4.73. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Dr Pepper Snapple Group as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, DPS has a yield of 2.46%, which is high for beverages stocks but still below the market’s top dividend payers.
What this means for you:
Are you a shareholder? If DPS is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be valuable exploring other income stocks as alternatives to DPS or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? If you are building an income portfolio, then Dr Pepper Snapple Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, DPS could still be an interesting investment opportunity. As with all investments, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Take a look at our latest free fundmental analysis to explore other aspects of DPS.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.