The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), Dr Pepper Snapple Group (DPS): Can Non-Alcaholic Beverages be Fun?

The Little Guy

Dr Pepper Snapple Group Inc. (NYSE:DPS) operates as a brand owner, manufacturer, and distributor of non-alcoholic beverages in the United States, Canada, Mexico, and the Caribbean.  The company’s beverage portfolio includes Dr Pepper Snapple Group (NYSE:DPS), Crush, Canada Dry, Sunkist soda, Schweppes, 7UP, A&W, RC Cola, Squirt, Peñafiel, Sun Drop, Diet Rite, Welch’s, Country Time, Vernors, Hawaiian Punch, Snapple, Hawiian Punch, Mott’s, Clamato, Yoo-Hoo, Deja Blue, FIJI, AriZona, ReaLemon, Nantucket Nectars, Mr and Mrs T mixers, Mistic, and Rose’s.

Net sales increased by 2% in 2012, while operating income increased by an equivalent 2%.  The company has also embraced the challenges of consumer concerns around health and wellness by launching additional brands in the TEN platform.  These beverages offer great taste with just ten calories per serving.  The company currently offers six flavors in the TEN platform.  First quarter 2013 results were solid as net sales increased by 1% and core EPS grew by 15%.

Dr Pepper Snapple Group (NYSE:DPS) also trades near its 52-week high and has a P/E of 16.47 versus a five-year average of 15.81.  The company pays a dividend of 3.09%, and increase of 11.76% over the prior year.

Foolish Conclusion

All three of these companies have made efforts to increase their healthy offerings, and all three could make good investments for your portfolio.  The Coca-Cola Company (NYSE:KO), a Warren Buffett favorite (Berkshire owns 9% of the stock) is a powerhouse brand and will continue to grow sales while paying a strong divided.  PepsiCo, Inc. (NYSE:PEP) pays a nice dividend and has the potential to grow its business through strategic marketing efforts between its food and beverage businesses.  The company also has the biggest portfolio of healthy offerings. Dr Pepper Snapple Group (NYSE:DPS) is the little brother, but also appears like a good investment given its 3%+ dividend yield and low valuation versus The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP).  While they have the most work to do as a company, success in their TEN platform could prove beneficial for shareholders.  Most importantly, all three stocks have a demonstrated commitment to growing their dividend.

The article Can Non-Alcaholic Beverages be Fun? originally appeared on Fool.com.

John Timmes has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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