PepsiCo's Dividend Keeps Growing

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For income investors,PepsiCo ( PEP ) is the kind of steady stock that won't cost them sleep.

Since the 2008 financial crisis, the deepest correction in PepsiCo shares has been 11%. That reflects the performance of the company's earnings, one of the most stable in IBD's database.

Already one of the biggest soft drink and snack foods providers in the world, PepsiCo is managing modest profit and sales growth.


That's OK with investors more interested in the company's quarterly dividend of 65.5 cents a share, which translates to an annualized yield of nearly 3%. The dividend has been raised every year for more than a decade.

While PepsiCo's profile is sedate, the company is not exactly free of challenges.

Activist investor Nelson Peltz of Trian Partners has criticized PepsiCo management and threatened a proxy fight. Reports say the California teachers' retirement system, CalSTRS, asked PepsiCo to add Peltz on the board.

There are consumer challenges, too.

Diet soda sales are falling faster than sales of other carbonated soft drinks in the U.S., Moody's Investors Service warned in a report Friday.

Carbonated soft drink sales fell 2.6% in 2013, while diet and low-calorie sodas were down 5%. That reversed a longstanding trend in which diet sodas were growing faster, says Linda Montag, a Moody's senior vice president. But of the major soft-drink companies, PepsiCo is the least exposed due to its large food business.

Growing media attention on possible health risks from artificial sweeteners is causing the shift away from diet soda, Moody's says.

PepsiCo edged past profit expectations with its Q2 results July 23. It also raised its profit outlook.

The stock is finding support at the 10-week moving average.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

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