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TheStreet Open House

Dr Pepper Refreshes With Dividend Boost

Stocks in this article: DPS GMCR KO PEP

NEW YORK (TheStreet) -- With all the talk of a new home soda system from Green Mountain Coffee Roasters (GMCR) and Coca-Cola (KO - Get Report), investors probably missed the news that Dr Pepper Snapple Group (DPS) announced on Thursday that it is raising its quarterly dividend by 8% to 41 cents a share from 38 cents.

Investors may want to check out the nation's No. 3 soda company, with its dividend yield of 3.2% and a lower price-to-earnings ratio than rivals Coke and PepsiCo (PEP - Get Report).

While Dr Pepper is much smaller than Coke and Pepsi in revenue, its dividend yield is higher -- Coke's is 2.8%, Pepsi's 2.9% -- and its P-E ratio is 15.5, compared with Coke's 19.7 and Pepsi's 18.6. Dr Pepper also has a lower price-to-sales ratio (1.51) than Coke (3.56) and Pepsi (1.8). And Dr Pepper has increased its dividend annually since 2009.

Among the company's 50 brands are Dr Pepper, Snapple, Sunkist, Squirt and A&W. It has six of the top 10 non-cola soft drinks. Thirteen of the company's top 14 brands hold a No. 1 or No. 2 market position in their categories.

While Coke offers growth with its line of non-carbonated drinks and now a stake in Green Mountain Coffee Roasters and Pepsi offers growth from its snack line, which could eventually be spun off into a separate company, Dr Pepper gives investors income and steady earnings.

The company continues to cut costs and increase its profit. Value and income investors should consider a trip to the Dr.

At the time of publication, the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Chris Katje has been fascinated with the stock market since a young age. That passion turned into a freelance writing career that began in 2008. Mr. Katje has seen his work appear on Seeking Alpha, the Motley Fool, The Street, and Variety. Chris's annual top ten stock picks list continues to beat the market and grow in popularity. You can follow Chris on Twitter (@chriskatje).

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