Jefferies Remains Positive on Keurig Dr Pepper (KDP), Sees Investor Confidence Returning

Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of the best dividend stocks to buy. KDP’s current momentum is driven by its acquisition of JDE Peet’s (JDEP), a Dutch coffee chain. On October 27, the company announced that it is securing $7 billion from Apollo and KKR to fund the JDEP acquisition. KDP hopes this will appease investor concerns about the company's excessive debt levels. The deal increases Keurig's leverage and triples its commitment to a coffee segment investors had sought to minimize, according to TD Cowen analyst Robert Moskow in a note to investors in early October.

On October 29, Jefferies maintained a Buy call on KDP but trimmed the price target from $41 to $39 following “a largely successful” investor meeting where investors finally looked past the flaws on the initial JDEP deal. The deal itself was complicated, as the $7 billion strategic investment substitutes conventional debt with a payment model involving a joint venture and preferred equity. However, Jefferies remains confident that the company’s strategic reasoning and accretion expectations stay intact.

The company has a 5-year history of raising its dividend payouts, and the plans for expansion are not likely to deter its solid shareholder returns. Keurig Dr Pepper Inc. (NASDAQ:KDP) is a multinational beverage company that offers a range of beverages and single-serve brewing systems.

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