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Keurig Dr Pepper Inc. (KDP)

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

Valuation Snapshot

Stable Growth$25.05 - $60.67$37.22
Multi-Stage$19.60 - $21.35$20.46
Blended Fair Value$28.84
Current Price$25.51
Upside13.05%
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 Rate9.08%9.08%9.08%
Growth Rate5.18%6.18%7.18%
Fair Value$25.05$37.22$60.67
Upside / Downside-1.79%45.89%137.81%

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 Rate9.08%9.08%9.08%
Growth Rate5.18%6.18%7.18%
Year 1 PV (M)1,237.341,249.101,260.86
Year 2 PV (M)1,225.841,249.261,272.90
Year 3 PV (M)1,213.591,248.541,284.14
Year 4 PV (M)1,200.651,246.971,294.61
Year 5 PV (M)1,187.091,244.601,304.32
PV of Terminal Value (M)20,668.8821,670.2422,710.05
Equity Value (M)26,733.4027,908.7129,126.89
Shares Outstanding (M)1,364.051,364.051,364.05
Fair Value$19.60$20.46$21.35
Upside / Downside-23.17%-19.80%-16.29%

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