S nack and beverage giantPepsiCo ( PEP ) served up an earnings surprise Tuesday, pushing the stock up more than 1%. Pepsi cleared resistance at about 95 and is approaching its Feb. 11 high. The stock is forming a cup-type base with a 100.71 entry.
The stock is a member of the S&P 500 Dividend Aristocrats index, which comprises 52 companies that have increased their payouts every year for the past 25 years. Pepsi's has increased every year since 1973.
That makes Pepsi a compelling stock for investors seeking income growth to go along with slow-but-steady asset appreciation.
The Purchase, N.Y.-based company said Tuesday that third-quarter profit was flat at $1.35 a share, beating Wall Street forecasts by 9 cents. Revenue fell 5% to $16.33 billion as the strong dollar reduced the value of sales earned in foreign currencies. But that was also better than expected, and Pepsi raised its full-year earnings outlook.
The owner of brands such as Gatorade, Frito-Lay and Quaker Foods last raised its dividend in June, increasing the quarterly payout by 4.7 cents, or 7%, to 70.25 cents a share. That's in line with the long-term dividend growth rate of 7%, a pace that Pepsi maintained even as stalwarts such asGeneral Electric ( GE ) andPfizer ( PFE ) slashed their payouts during the recession.
The annualized dividend of $2.81 yields about 3% at the current share price.
RivalCoca-Cola ( KO ), another Dividend Aristocrat, boasts similarly strong long-term dividend growth.
Pepsi earns about half its revenue outside North America, mainly in Europe, Latin America and the Middle East.
The company is boosting productivity by further automating plants, closing facilities and streamlining its operations.
Analysts expect profit this year to dip 2% to $4.52 a share before rising 8% in 2016.