July 2, 2020

PepsiCo: Strong Brands Lead to Long-Term Dividend Growth


The Dividend Aristocrat has raised its dividend for over 40 consecutive years. A huge portfolio of billion-dollar brands is a major reason for its success



With the potential for a second coronavirus wave, as well as concerns over a recession amid an unprecedented macroeconomic outlook, many investors are looking for stocks with a consistent track record of delivering positive returns. One such stock is PepsiCo Inc. (NASDAQ:PEP).

The company has an outstanding track record of 48 years of consecutive dividend increases, displaying a resilient business that can withstand and even keep growing throughout adverse economic conditions.

PepsiCo is a global food and beverage company that generates around $70 billion in annual sales. The company’s products include well-known brands like Pepsi, Mountain Dew, Frito-Lay chips, Gatorade, Tropicana orange juice and Quaker foods. It has 23 invidividual billion-dollar brands, which each generate $1 billion or more in annual sales.



With a proven strategy of managing its brands, we believe PepsiCo is a great stock to own for reliable, long-term returns.

Being a consumer staples company, PepsiCo’s sales are way less volatile than other sectors since households are likely to keep consuming the company’s products despite economic conditions. Everyday consumables like Quaker and Lipton are mostly recession-proof. As a result, the company has been able to grow its earnings consistently. Earnings per share has grown from $3.81 in fiscal 2010 to an estimated $5.64 for 2020. With such consistent profitability, PepsiCo has keep increasing its capital returns as well.



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