x
Dividend Stocks

PepsiCo Dividend: A Sweet-Tasting Investment

The PepsiCo dividend is not flashy. It’s not grabbing the big headlines. You’re not going to confuse it with pop stars like Camila Cabello or Shawn Mendes walking down a red carpet, paparazzi cameras blinding.

But it is dependable, reliable and steady. You can count on it for sustained and consistent excellence.  And that’s worth a heck of a lot in the world of dividend investing.

Is PepsiCo right for your stock portfolio? Perhaps. But before we try to answer that question, let’s dive into what makes PepsiCo’s dividend so special.

PepsiCo Dividend History

Ex Dividend Date Amount Declaration Date Record Date Payment Date
03/05/2020 $0.96 02/10/2020 03/06/2020 03/31/2020
12/05/2019 $0.96 11/14/2019 12/06/2019 01/07/2020
09/05/2019 $0.96 07/11/2019 09/06/2019 09/30/2019
06/06/2019 $0.96 04/30/2019 06/07/2019 06/28/2019
02/28/2019 $0.93 02/13/2019 03/01/2019 03/29/2019
12/06/2018 $0.93 11/15/2018 12/07/2018 01/07/2019
09/06/2018 $0.93 07/13/2018 09/07/2018 09/28/2018
05/31/2018 $0.93 05/01/2018 06/01/2018 06/29/2018
03/01/2018 $0.81 02/05/2018 03/02/2018 03/30/2018
11/30/2017 $0.81 11/17/2017 12/01/2017 01/08/2018
08/30/2017 $0.81 07/14/2017 09/01/2017 09/29/2017
05/31/2017 $0.81 05/02/2017 06/02/2017 06/30/2017
03/01/2017 $0.75 02/02/2017 03/03/2017 03/31/2017
11/30/2016 $0.75 11/17/2016 12/02/2016 01/06/2017
08/31/2016 $0.75 07/14/2016 09/02/2016 09/30/2016
06/01/2016 $0.75 05/03/2016 06/03/2016 06/30/2016
03/02/2016 $0.70 02/04/2016 03/04/2016 03/31/2016
12/02/2015 $0.70 11/19/2015 12/04/2015 01/07/2016
09/02/2015 $0.70 07/16/2015 09/04/2015 09/30/2015
06/03/2015 $0.70 05/05/2015 06/05/2015 06/30/2015
03/04/2015 $0.66 02/05/2015 03/06/2015 03/31/2015
12/03/2014 $0.66 11/20/2014 12/05/2014 01/07/2015
09/03/2014 $0.66 07/17/2014 09/05/2014 09/30/2014
06/04/2014 $0.66 05/06/2014 06/06/2014 06/30/2014
03/05/2014 $0.57 02/06/2014 03/07/2014 03/31/2014
12/04/2013 $0.57 11/21/2013 12/06/2013 01/02/2014
09/04/2013 $0.57 07/19/2013 09/06/2013 09/30/2013
06/05/2013 $0.57 04/30/2013 06/07/2013 06/28/2013
02/27/2013 $0.54 02/07/2013 03/01/2013 03/29/2013
12/05/2012 $0.54 11/27/2012 12/07/2012 01/02/2013

.

All About PepsiCo

A blue can of Pepsi against a beautiful hazy and cloudy black and blue background | Investment U

Ahhhh, Pepsi.Most likely when you think about PepsiCo, you think not about its dividend but about its sugary-sweet cola beverage and its famed rivalry with Coca-Cola. 

But there’s much more to the company than that. In fact, food and beverage company PepsiCo is broken up into six distinct business units:

  1. North American Beverage
  2. Frito-Lay North America
  3. Quaker Foods North America
  4. Latin America
  5. Europe Sub-Saharan Africa
  6. Asia, Middle East and North Africa.

The North American Beverage (NAB) group includes, of course, its flagship drink, Pepsi, but also other nonalcoholic beverage brands such as Tropicana, Mountain Dew and Gatorade.

The NAB group is the company’s biggest division by sales, with a $21.1 billion total revenue haul in 2018 – an increase of 1% from 2017.

Although NAB is the largest division by revenue, it’s not the leading profit center. Instead, Frito-Lay North America, with its lip-smacking salty brands like Doritos, Lay’s, and Fritos, has been a godsend for the firm.

In fact, operating profit in 2018 grew by 4%, contributing to a total of 9% growth over the last two years. The growth stems from both productivity savings, as well as revenue increases.

No thanks to me – I’m trying to cut my salty snack intake, to be honest.

Growth in the international markets divisions has also been strong. That’s thanks to a growing worldwide middle class eager to consume everything from a cold sugary glass of Pepsi to a hearty breakfast of Quaker Oatmeal. 

PepsiCo Stock Today.

Over the last six months, PepsiCo’s stock has grown from $116.59 on March 11 to $136.36 as of closing on Wednesday, September 11. So it’s certainly not the least-expensive stock on the market.

On September 19, PepsiCo reached an all-time high of $139.18, helped by the overall strength of the market. Its current earnings per share are $9.03. 

The stock currently has a market capitalization of about $193.1 billion and trades at an average volume of about 4.3 million shares.

In terms of valuation, the average price-to-earnings (PE) ratio of the market has historically been about 15. While the S&P currently sports a PE of about 22, Pepsi trades down at about 15 right now. 

In fact, its pricing is right around fair market value. So a buyer wouldn’t be taking advantage of any glaring inefficiency in the stock price.But we’re not looking at PepsiCo to take advantage of crazy growth or attractive capital gains.

We’re in it for PepsiCo’s quarterly dividend. So let’s take a look at its historical dividend and where we are today.

PepsiCo’s Reliable Dividend 

PepsiCo is a member of a distinct group of stocks: the Dividend Aristocrats. As income expert Marc Lichtenfeld has reminded us, dividend-paying stocks have outperformed the general market for decades.

Currently, the annual PepsiCo’s dividend payout is $3.82 per share paid quarterly for a yield of about 2.78%. The payout ratio of PepsiCo stock is currently 67.1%, which is an indicator that the cash dividends are sustainable.

On the other hand, if the payout ratio was more than 100%, it would be a red flag on the prospects for future growth. Speaking of growth, PepsiCo’s dividend has increased every single year – for 47 consecutive years!

There’s financial power in that kind of reliability. But does that steady payout make PepsiCo stock a buy?

Why the PepsiCo Dividend Could Be a Great Buy

If you’re looking to add a reliable dividend-income producer to your portfolio, you may want to consider adding some Pepsi-Cola… And some Mountain Dew, Lay’s potato chips and Quaker oatmeal while you’re at it.

Here’s Why PepsiCo Stock (and its Dividend) Might be a Great Buy:

  • PepsiCo’s Reinvestment

    PepsiCo knows that, as the old saying goes, you have to spend money to make money. And it is doing so on productivity improvements, cost-saving measures, as well as marketing efforts, all three areas with great potential to increase the bottom line. A company with a storied past that invests wisely in its future is generally a good bet.

  • Product Diversity

    I’m no cola drinker, but that doesn’t mean PepsiCo doesn’t have a product for me and for lots of other non-soda drinkers. And with changing consumer tastes away from sugary drinks toward more health-focused beverages, PepsiCo’s product diversification is more important than ever. Also, with Coke taking a big bet on coffee last year, expect Pepsi to keep looking for modes of product diversification. For instance, PepsiCo’s recent acquisition of SodaStream and its forays into flavored sparkling-water drinks.

  • Global Diversity 

    With current domestic events like the trade war with China and an inverted yield curve, a brand with a strong global presence is not a bad bet. And as more people around the world continue to grow into the middle class and increase their purchasing power, PepsiCo should have a steady stream of future buyers.

  • A Reliable Dividend

    The 47 years of dividend growth is nothing to sneeze at. Based on the other fundamental indicators, there’s every reason to expect PepsiCo to continue increasing its payout.

With all that being said, investing in PepsiCo could be a solid play in a turbulent, volatile world. If you’re looking to balance your portfolio with some reliable and stable payments, PepsiCo may be just the stock you’re looking for.

After all, 47 years of PepsiCo dividend growth can taste pretty sweet indeed.


About

Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.

He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.

His primary interests at Investment U include personal finance, debt, tech stocks and more.

Articles by
Related Articles