logo
  Join        Login             Stock Quote

The Comfort Of Sugar: Considering Coke, Pepsi, Dr Pepper

 June 04, 2012 09:43 AM
 


(By Kevin Donovan) Mike Bloomberg, the most interesting mayor in the world, to soft drink lovers: "Stay thirsty, my friends."

Call it one more creepy encroachment of the nanny state or a progressive stride for a slimmer state, but New York City's proposed ban on serving supersized sugary sodas in restaurants has the beverage world abuzz with something more than caffeine.

But a ban on the gargantuan quenchers would likely have more effect on the likes of McDonald's and other fast food outlets that capture fat profit margins on soft drinks.

Indeed, if you insist on owing equities in a market officially put on recession alert in the wake of the dismal May jobs data released Friday, dividend-paying icons Coca-Cola (KO),  PepsiCo (PEP), and Dr Pepper Snapple (DPS) are well-positioned consumer names with less sensitivity to market moves than the stocks of companies more reliant on discretionary income.

[Related -Coca-Cola Company (KO) Dividend Stock Analysis]

Thus far, Coca-Cola has been the lone company to speak out against the proposed ban on restaurant sales of supersized drinks.

"The people of New York City are much smarter than the New York City Health Department believes," the Atlanta-based company said in a statement. "New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase. We hope New Yorkers loudly voice their disapproval about this arbitrary mandate."

[Related -Pepsico, Inc. (PEP) Dividend Stock Analysis]

Reasons to own these shares are: growing dividends, low betas, and reasonable valuations.  From the biggest to smallest market capitalization, here's the lowdown at a glance.

Company

Dividend Yield

Beta

Forward PE

Coca-Cola

2.79%

0.52

16.39

PepsiCo

3.18%

0.47

15.20

Dr Pepper Snapple

3.35%

0.72

12.78

Source: Finviz

What's more, Coca-Cola and PepsiCo have increased dividends for 50 and 40 consecutive years, respectively.  Dr Pepper Snapple has increased its dividend each year since it became a standalone company three years ago.

And there's room for dividend growth.  Payout ratios stand at about 50% for Coca-Cola and PepsiCo and 47% for Dr Pepper Snapple.

First-quarter results were unspectacular but steady at these beverage companies.

Coca-Cola reported $0.89 in earnings per share, compared with $0.82 in the year-ago quarter. Beverage volume was up 5% worldwide. 

PepsiCo, which sells salty snacks as well as beverages, posted EPS of $0.71, even with the prior year. Volume was up 4%.

Dr Pepper Snapple reported $0.48 in EPS vs. $0.50 in the year-ago quarter.  Sales volume decreased 1%.

Meanwhile, share price performance has been similarly steady.  Coca-Cola has been the best performer.  At $73.09, shares are up 13.88% in the past year and 5.23% year to date.  PepsiCo is at $67.51, up 0.30% in the past year and 3.38% year to date.  Dr Pepper Snapple trades at $40.63, up 3.10% in the past year and 3.83% year to date.

One could do worse. 

Full disclosure: As we write this, a can of soda from one of these companies rests on the coaster.  We surmise that other consumers are as addicted as us.  Reliable refreshment is nothing to disdain in this desert of a stock market.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageChipotle Mexican Grill, Inc. (CMG) Q2 Earnings Preview: Will Higher Traffic Offset Higher Costs the Key

Chipotle Mexican Grill, Inc. (NYSE:CMG) will host a conference call to discuss second quarter 2014 read on...

article imageNetflix, Inc. (NFLX) Q2 Earnings Preview: The Ruby Month for a Reason

Netflix, Inc. (NASDAQ:NFLX) will post its second-quarter 2014 financial results and business outlook on its read on...

article imageLadenburg Thalmann Financial Services (NYSEMKT:LTS): Heavy, Durable Insider Buying

Ahh, but any worries over price levels didn’t stop multiple insiders at Ladenburg Thalmann Financial read on...

article imageInternational Business Machines Corp. (IBM) Q2 Earnings Preview: Small Beat and Pop

International Business Machines Corp. (NYSE:IBM) will host a conference call Wednesday, Jul. 16, 2014 at read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.