UBS Believes Dr Pepper Snapple Group's (DPS) Board Meeting May Results in Dividend Increase - PT to $90

UBS reiterates a Neutral rating on Dr Pepper Snapple (NYSE: DPS), and raised the price target to $90.00 (from $89.00), ahead of the company's 4Q release and board meeting. The board meeting may be hidden from investor view amidst the company's earnings. Given another busy earnings season, UBS believes that some investors may have lost sight of the possibility of a forthcoming dividend raise. UBS expects the DPS Board to meet mid-week, which may result in a further dividend increase announcement shortly thereafter.

Analyst Stephen Powers commented, "Beyond a recent double-digit EPS growth run-rate, another part of DPS's appeal has been its stated intention to modestly (yet consistently) increase its dividend payout ratio (currently at ~47%, up from ~45% the same period a year ago). However, given another busy earnings season, we believe some investors may have lost sight of the possibility of a forthcoming dividend raise. Specifically, we expect the DPS Board to meet mid-week, which we think should result in a further dividend increase announcement shortly thereafter (as was the case in 2015). For our part, we model a +15% dividend increase for 2016, (vs. +17% in 2014), though we note that this may be moderately optimistic given our expectation for +10% EPS growth in FY15. Still, this would keep DPS' 2016 dividend yield at ~2.5%, and solidify DPS as a solid dividend growth story."

For an analyst ratings summary and ratings history on Dr Pepper Snapple click here. For more ratings news on Dr Pepper Snapple click here.

Shares of Dr Pepper Snapple closed at $88.99 yesterday.

You May Also Be Interested In

• Boston Scientific (BSX) PT Raised to $83 at Stifel
• Equifax (EFX) PT Lowered to $263 at Citi
• Owens Corning (OC) PT Raised to $172 at Evercore ISI