Every year, we review all of the Dividend Aristocrats. Following that, we’ll look at the food and beverage conglomerate PepsiCo (PEP).
The stock boasts a 2.9 percent annual yield and has raised its payout for 49 consecutive years. The stock is suitable for risk-averse income investors because the company’s dividend is very safe.
PepsiCo’s stock isn’t quite cheap right now, but because to its robust business model and consistent growth, it’s rarely a bargain. The corporation should have no issue increasing its dividend for many years to come.
Business Overview
Caleb Bradham, a North Carolina pharmacist, invented Pepsi-Cola in the late 1890s. Frito-Lay, Inc. was created in 1961 when the Frito Company and the H. W. Lay Company merged. PepsiCo was formed in 1965 when Pepsi-Cola and Frito-Lay merged to become PepsiCo.
PepsiCo is now a multinational food and beverage conglomerate. It has a market valuation of $198 billion and yearly revenue of more than $70 billion.
Food and beverage divisions account for over half of the company’s revenue. It is also geographically balanced between the United States and the rest of the world.
PepsiCo has a diverse portfolio and owns a number of well-known brands. Pepsi and Mountain Dew sodas, as well as non-sparkling beverages like Pure Leaf, Tropicana, Gatorade, and bottled water, are among the company’s prominent brands.
PepsiCo has a major snack business under the Frito-Lay brand in addition to its main beverage businesses. The business has also developed a healthy food line, which includes Quaker, Naked, and Sabra. The corporation has benefited from its wide portfolio. It offers items that appeal to a wide range of preferences and health concerns.
Is Pepsi a dividend king?
In the unlikely event that Pepsi raises its dividend for the 50th year in a row in 2022, the firm will be awarded the coveted Dividend King title. Continued increases are quite likely, given the company’s track record and the opportunity to join this distinguished group, making Pepsi a compelling dividend growth story. For the foreseeable future, Pepsi shareholders can expect the business to continue to provide cash to them through its dividend, which will be increased.
Pepsi has historically used share repurchases to distribute value to its shareholders in addition to regular dividend growth. In 2021, the firm set aside a modest $106 million for share repurchases, but it may expand this in the future if it determines that this is the most accretive use of its cash.
Is PepsiCo a good dividend stock?
To begin with, Pepsi has a long history of paying dividends to its stockholders. Pepsi stock also offers an appealing dividend yield and solid dividend growth prospects.
Finally, Pepsi’s dividend is backed by a solid corporation with well-known brands.
This is a potent combo that any dividend investor would appreciate.
What makes a Dividend Aristocrat?
A Dividend Aristocrat is a publicly traded corporation that has paid annual dividends to its shareholders for the past 25 years. The Dividend Aristocrat list presently has 65 companies on it. Every year, when a company reaches the 25-year mark, it is added to the list. If a firm fails to boost its dividend, it must wait another 25 years to be reinstated on the list. A corporation must be a Dividend Aristocrat if it is a member of the S&P 500, which is an index that measures the 500 largest publicly traded companies.
Dividend Aristocrats can be purchased through both traditional and online brokerage accounts. Dividend Aristocrats are also available as exchange-traded funds (ETFs). Rather than individual aristocrats, this ETF includes all of them.
Is PepsiCo a good company?
It’s a safe bet that no American home doesn’t have several PepsiCo products in the pantry or refrigerator.
Whatever the case may be, times are changing, and PepsiCo is moving with with them. It does not want to be associated with just another drink or food company. PepsiCo is committed to “Performance with Purpose,” which is defined as “the conviction that what is beneficial for business can and should also be good for society.”
PepsiCo employs 297,000 people globally, with 107,000 in the United States. Employees at PepsiCo have access to a comprehensive set of health and financial benefits. One of its key goals is to promote workplace diversity; Black Enterprise magazine named Pepsi to its list of “40 Best Companies for Diversity” last year.
Is IBM a dividend king?
By shifting its business from hardware to software and cloud services, International Business Machines (IBM, $142.36) hopes to reverse nearly a decade of sales declines. By acquiring Red Hat in 2019, the company expanded its cloud business and has since made cloud-related services its fastest-growing division.
IBM’s June quarter results suggest that the business is making progress toward its objectives. Revenues increased 3% year over year to $18.7 billion, exceeding analysts’ expectations of $18.3 billion. In addition, IBM announced adjusted profits per share (EPS) of $2.33, compared to an average projection of $2.29 per share. The double-digit improvements Big Blue made in its cloud operations were particularly noteworthy. In 2021, the company expects full-year sales growth of $11 billion to $12 billion and adjusted free cash flow of $11 billion to $12 billion.
IBM is in the midst of spinning off Kyndryl, its $19 billion-in-sales managed infrastructure business, in order to devote more resources to its cloud business. IBM forecasts steady mid-single-digit sales growth following this divestiture.
The Dow dividend stock has historically been a big generator of free cash flow, which totaled $9.7 billion over the past 12 months, handily covering $5.8 billion in dividends. Over the same time period, IBM has paid down $6.4 billion in debt and still has $8.2 billion in cash on its balance sheet.
IBM has increased its dividend for 26 years in a row, making it one among the more recent members of the Dividend Aristocrats. It now pays a $6.56 annual dividend, yielding 4.6 percent. However, IBM wants to share the payout between the two businesses as part of the Kyndryl separation, though it’s unclear how the dividend will be split.
Based on the stock’s low 7.2 times price-to-cash flow multiple, which is an 8.8% discount to its five-year average, IBM shares appear to be undervalued.
Why is Pepsi better than Coke?
Pepsi has a higher calorie, sugar, and caffeine content than Coca-Cola.” Because Pepsi is sweeter than Coke, it had an immediate advantage in a taste test. Pepsi also has a zesty flavor burst, as opposed to Coke’s more raisiny-vanilla flavor. However, over the course of a can, the explosion tends to dissipate.
What stock is better Coca-Cola or Pepsi?
PEP has a lower payout ratio and a faster five-year dividend growth rate than KO, but KO has a greater yield. Pepsi will have a yield on current cost of 4.18 percent vs 3.78 percent for Coca-Cola if present five-year dividend growth rates continue for another half decade, which is not a guarantee.
Is Kinder Morgan a dividend aristocrat?
This Aristocrat will almost certainly continue to provide a healthy dividend. The oil and gas transportation industry is expected to develop at a compound annual growth rate of 6% through 2026, owing to increased demand. Pipeline projects that were put on hold during the pandemic are now ramping up and running at full capacity. This could give Enbridge with revenue growth to fund dividends, as well as a boost to the stock price as it recovers from a 35% decline in 2020. The stock dropped from $42 to $27 before regaining momentum and reaching the $40 barrier once more.
Is Home Depot a dividend aristocrat?
The financial crisis caused the dividend freeze 12 years ago, which is why the company is “nearly” a dividend aristocrat. The company pays a safe dividend with a payout ratio below 50%, and the current dividend yield is just under 2%, about 50% greater than the S&P 500’s dividend yield.
