Thanks Dividend Garden. It is a good article and a reasonable conclusion. I’ve been reading a lot of positive things about DPS lately, but have never run the numbers on it myself. So, prompted by your article, I ran it through my spreadsheet to see how it compares. Overall, it scored a very respectable 64 in my crude system, right on par with the likes of MSFT and TGT. Here are the highlights as I see it, though I’m the first to admit I’ve only done a quick glance at the company at this point.
Of course I love the simple and understandable business model. DPS has a very attractive yield of 3.44 percent at today’s close. It does not have much of a dividend streak going as yet, at five years, but the dividend growth has certainly been healthy in that time, from $0.90 in 2010 (the first full year) to $1.52 in 2013. With a payout ratio in the neighborhood of 50 percent, the dividend should be easily sustainable, but I wonder how fast they’ll be able to continue growing the divvy going forward. Earnings have grown well since a little trouble in 2008, but seem to be leveling off some. With a P/E right around 15 it does not appear to be a screaming buy, but not too expensive either. I haven’t even peeked at the balance sheet myself.
While it seems pretty solid on these metrics, I doubt I’ll pick up any shares any time soon. I looked at the DPS stable of brands (here
), and while there are a number of familiar faces in there, and even some old friends, the lineup pales next to those of KO and PEP. They just aren’t brands that I and my friends reach for given a choice. I know that KO and PEP generally trade at higher valuations, and so DPS may seem inexpensive by comparison, but I’m more comfortable buying KO and PEP given their marquee brands, proven decades of management, and long and established dividend streaks. I may miss out on a great opportunity, but DPS is going to have to stay on the bench for the time being.