RC Cola or Bleach With a 3.5% Dividend Yield? Dr. Pepper Snapple vs. Clorox
Everyone’s hunting for income in this low-interest-rate world of ours, and finding dividend-paying stocks to consider is as easy as firing up the YCharts Stock Screener. In this case we looked at companies with market caps of $1 billion to $10 billion and flipped past pages of iffy names to land on Clorox (CLX), a tried-and-true consumer products maker, and Dr. Pepper Snapple (DPS), a catch-all for beverage cast-offs. You could do worse, and the two have some financial similarities. Clorox’s market cap is roughly equal to Dr. Pepper’s market cap, in the $9 billion range. Clorox’s PE and Dr. Pepper’s PE are each within shouting distance of 15. And Clorox’s revenue growth and Dr. Pepper’s revenue growth are single-digit affairs in very mature markets. In other words, they’re dividend stocks. Clorox is paying a bit more of its profit out in dividends, so Dr. Pepper may have more immediate room to lift its payout. But let’s be careful out there: income is nice, but you’re also buying the underlying stock. Read up.
Filed under: Company Analysis