PEP Stock Remains a Top Pick for Dividend Investors
In a world of soaring tickers, dividend announcements often
get ignored. After all, if you can earn a double-digit profit from one upswing
in a company’s share price, who cares about a few percentages of dividend
yield?
However, when a company has the ability to increase its
dividend payment to shareholders year after year for a long time, it’s often a
sign of durable competitive advantage. And if there’s one thing that every
income investor should do, it’s to consider businesses with durable competitive
advantages.
And that’s why the latest dividend announcement from
PepsiCo, Inc. (NASDAQ:PEP) deserves attention.
On February 11, PepsiCo announced a five-percent increase to
its annual dividend rate from $4.09 per share to $4.30 per share, starting with
the June payment.
That gives PepsiCo stock a forward dividend yield of just
over three percent at the current share price.
Here’s the more important part: the announcement marked the
company’s 49th consecutive annual dividend hike.
In other words, if PepsiCo, Inc. continues its track record
for another year, it will become a Dividend King—a title reserved for companies
that have increased their payouts for at least 50 consecutive years.
Half a century of yearly pay raises to shareholders is no
easy feat. Among the thousands of companies that trade on U.S. stock exchanges,
there are only 31 Dividend Kings at the time of this writing.
Of course, track records—however impressive they
are—represent past performance. And past performance is no guarantee of future
results. But as I mentioned earlier, this kind of track record is often a sign
of a durable competitive advantage.
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