Both Coca-Cola (KO) and PepsiCo (PEP) are legendary dividend stocks. They are each members of the Dividend Aristocrats, a group of 51 companies in the S&P 500 with 25+ years of consecutive dividend increases.
You can see the full Dividend Aristocrats List here.
PepsiCo has raised its dividend for years, while Coca-Cola’s streak is slightly longer. It has increased its dividend for years in a row.
In fact, Coca-Cola has reached an even more exclusive club.
With 55 years of dividend increases under its belt, it is a Dividend King—a select group of 19 stocks with 50+ years of consecutive dividend increases.
You can see the entire list of Dividend Kings here.
Coca-Cola and PepsiCo might seem like identical companies, since they dominate the global soda industry.
But they are more different than it seems. This article will discuss which of the two soda giants is the better dividend stock to buy today.
Business Overview
Winner: PepsiCo
PepsiCo and Coca-Cola have amassed enormous product portfolios, that are loaded with popular brands.
PepsiCo has 22 ‘billion-dollar brands’, which are brands that collect at least $1 billion in retail sales each year.
Source: Investor Relations
For its part, Coca-Cola has 20 brands that generate $1 billion or more in annual sales.
The difference between the two companies is that Coca-Cola’s portfolio is 100% comprised of beverages.
Source: 2017 CAGNY Presentation, page 15
Pepsi’s product portfolio is nearly 50-50 between food and beverages.
The current environment is more difficult for Coca-Cola than for PepsiCo, because soda consumption is dropping. Soda sales have fallen every year in the U.S. for the past 11 years.
Soda consumption is at a 30-year low. Consumers are taking a negative attitude towards soda, because of its calorie and sugar content.
This is problematic for Coca-Cola more than PepsiCo, because PepsiCo has a large food portfolio that includes Frito-Lay, Quaker, and several other snacks brands.
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