Shares of beverage company Keurig Dr Pepper (KDP -0.12%) fell 12.1% in October, according to data provided by S&P Global Market Intelligence. It was a busy month for the company, considering it reported financial results, acquired another company, and had some insider ownership activity. However, as the stock price demonstrates, the news wasn't well received by investors.
On Oct. 24, Keurig Dr Pepper reported financial results for the third quarter of 2024. Q3 net sales were only up 2% year over year, and its operating income went up by less than 1%. That's not much to get excited about, and it contributed to the drop.
Further contributing to the drop was news on Oct. 28 that Jab Holding Company is selling 60 million shares for $32.85 each. Jab has been a major shareholder since it became a publicly traded company in 2018. But Jab has been reducing its massive stake. Even after completing the share offering, Jab could still hold roughly 16% of Keurig Dr Pepper stock.
It's not so much that investors are worried about Jab selling. Rather, when a major shareholder sells big chunks like this, it can create a temporary imbalance in supply and demand for Keurig Dr Pepper stock. This sudden increase in shares can drop the price, especially considering the offering was priced slightly below where it traded at the time the offering was announced.
It's not all bad for Keurig Dr Pepper shareholders
There were pockets of good news for Keurig Dr Pepper during October. Specifically, it's notable that the company grew net sales by 2% without raising prices -- the growth came from higher sales volume. Not all beverage companies are enjoying true growth as this business is.
Moreover, Keurig Dr Pepper will look to keep growing by acquisition if necessary. On Oct. 24, the company announced that it was spending $990 million to acquire 60% of energy drink company Ghost. In 2028, it intends to buy the remaining 40% of the company. Considering Ghost claims to have quadrupled sales in the last three years, this is a high-growth move for Keurig Dr Pepper.
What to do now
Keurig Dr Pepper will hopefully get a growth boost from Ghost. Perhaps the company can benefit from future price increases considering it's paused those for now. But all of this said, the company likely won't turn heads with growth on a regular basis. Rather, it's more likely to be a slow and steady performer.
Part of the equation is Keurig Dr Pepper's dividend. Thanks to the drop in stock price during October, the dividend yield is now 2.7%, which is quite respectable. If I were looking for a steady company with a decent dividend yield as well as potential for good dividend growth, I'd be giving Keurig Dr Pepper stock a strong look here.