Definitive Analysis
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Keurig Dr Pepper Inc. (KDP)

Company Dividend Discount ModelIndustry: Beverages - Non-AlcoholicSector: Consumer Defensive

Valuation Snapshot

Stable Growth$24.94 - $60.10$36.99
Multi-Stage$19.54 - $21.29$20.40
Blended Fair Value$28.69
Current Price$25.51
Upside12.47%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS7.18%14.18%0.880.840.790.700.620.620.170.300.280.26
YoY Growth--4.55%5.74%13.09%12.88%0.24%263.79%-43.96%7.25%8.73%11.99%
Dividend Yield--2.56%2.68%2.24%1.85%1.80%2.55%0.61%1.59%1.79%1.81%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,582.00
(-) Cash Dividends Paid (M)1,248.00
(=) Cash Retained (M)334.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)316.40197.75118.65
Cash Retained (M)334.00334.00334.00
(-) Cash Required (M)-316.40-197.75-118.65
(=) Excess Retained (M)17.60136.25215.35
(/) Shares Outstanding (M)1,364.051,364.051,364.05
(=) Excess Retained per Share0.010.100.16
LTM Dividend per Share0.910.910.91
(+) Excess Retained per Share0.010.100.16
(=) Adjusted Dividend0.931.011.07
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.18%6.18%7.18%
Fair Value$24.94$36.99$60.10
Upside / Downside-2.24%44.99%135.58%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,582.001,679.841,783.731,894.052,011.192,135.572,199.64
Payout Ratio78.89%81.11%83.33%85.55%87.78%90.00%92.50%
Projected Dividends (M)1,248.001,362.521,486.431,620.451,765.371,922.012,034.67

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.18%6.18%7.18%
Year 1 PV (M)1,237.131,248.891,260.66
Year 2 PV (M)1,225.441,248.851,272.48
Year 3 PV (M)1,212.991,247.921,283.51
Year 4 PV (M)1,199.861,246.151,293.75
Year 5 PV (M)1,186.111,243.581,303.25
PV of Terminal Value (M)20,590.8721,588.4622,624.34
Equity Value (M)26,652.4127,823.8429,037.99
Shares Outstanding (M)1,364.051,364.051,364.05
Fair Value$19.54$20.40$21.29
Upside / Downside-23.41%-20.04%-16.55%

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