Coca-Cola’s (KO) stock gets a lot of attention for its dividend. However, rival PepsiCo (PEP) offers a superior payout to shareholders.
Claim 30% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
During Pepsi’s recent earnings call with analysts and media, management said that they will increase the dividend on PEP stock by 4% this June. That will be the 54th consecutive year that Pepsi has raised its distribution, making it a Dividend King, defined as any company that increases its dividend for 50 years or longer.
While Coke has increased its dividend for 64 consecutive years, PepsiCo actually offers the superior payout and yield. Currently, PEP stock pays a quarterly dividend of $1.42 per share, giving it a yield of 3.61%. That compares to a quarterly payout of $0.53 a share for Coca-Cola, giving KO stock a yield of 2.79%.
PepsiCo’s Earnings
PepsiCo is clearly committed to its dividend and the payment looks sustainable based on the company’s strong financial results. Pepsi most recently reported earnings per share (EPS) of $1.61, which topped the $1.55 consensus forecast of analysts.
Revenue in the period totaled $19.44 billion, which beat the $18.94 billion expected on Wall Street. Sales were up 8.5% from a year ago. PepsiCo makes soft drinks such as Mountain Dew and Pepsi, as well as potato chips, Quaker oatmeal, and sports drink Gatorade.
Is PEP Stock a Buy?
PepsiCo’s stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on seven Buy and eight Hold recommendations issued in the last three months. The average PEP price target of $173.16 implies 10% upside from current levels.
