10 Best Dividend-Paying Beverage Stocks to Buy

6. Keurig Dr Pepper Inc. (NASDAQ:KDP)

Number of Hedge Fund Holders: 38

Keurig Dr Pepper Inc. (NASDAQ:KDP) is a leading beverage company in North America with a portfolio of more than 125 owned, licensed, and partner brands, leading the way in a wide range of refreshing beverages. The company owns the #1 single-serve coffee system in the US (Keurig) and has grown Dr. Pepper to become the second-largest soft drink brand in America, having overtaken Pepsi by the end of 2023.

Keurig Dr Pepper Inc. (NASDAQ:KDP) delivered net sales of $3.89 billion in Q3 2024, up 2.26% YoY but missing analysts’ estimates by $31 million. The company’s core refreshment segment, which includes Dr. Pepper, Snapple, Canada Dry, and Sunkist, continued to perform well in Q3 2024, with revenue jumping 5.3% YoY to $2.4 billion. KPD also remains financially strong and reported more than $500 million in free cash flow during Q3, keeping it on track for a meaningful step-up in full year cash flow compared to 2023. The company declared a regular quarterly cash dividend of $0.23 per share this month.

Keurig Dr Pepper Inc. (NASDAQ:KDP) announced in October 2024 that it has reached an agreement to purchase a majority stake in energy drink maker GHOST for $990 million, with plans to purchase the rest in 2028. The brand will complement KDP’s existing energy portfolio and substantially enhance its presence in the category. However, the acquisition comes at a time when the energy drink category has slowed down in the US, largely due to weak traffic at convenience stores.

Oakmark Select Fund stated the following regarding Keurig Dr Pepper Inc. (NASDAQ:KDP) in its Q4 2024 investor letter:

“Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of North America’s leading beverage companies, with dominant positions in single-serve coffee and flavored soft drinks. The soft drink portfolio has an impressive track record of volume growth and market share gains. We believe this performance can continue due to favorable demographic trends, brand strength, and distribution advantages. Recently, weakness in the Keurig coffee division caused the stock price to come under pressure. However, we believe these industry-wide challenges will prove transitory because coffee remains a popular beverage. Keurig’s coffee division is poised to capitalize on this demand with the largest installed base of single-serve brewers and ample runway to increase household penetration. At the current quote, the market ascribes minimal value to Keurig. We were happy to purchase shares in this above-average business at a discount to the market multiple, other beverage peers and private market transactions.”