Up to date on March seventh, 2025 by Nathan Parsh
We consider the Dividend Aristocrats are the “cream of the crop” of the U.S. inventory market. The Dividend Aristocrats are a bunch of S&P 500 shares which have elevated their dividends for at the very least 25 years, amongst different necessities.
With this in thoughts, we created an inventory of all 69 Dividend Aristocrats, together with essential monetary metrics similar to dividend yields and price-to-earnings ratios.
You’ll be able to obtain your free listing of all 69 Dividend Aristocrats by clicking on the hyperlink under:
Disclaimer: Positive Dividend isn’t affiliated with S&P International in any approach. S&P International owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet relies on Positive Dividend’s personal evaluate, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the data on this article or spreadsheet is official knowledge from S&P International. Seek the advice of S&P International for official data.
We evaluate all of the Dividend Aristocrats every year. Subsequent up, we’ll evaluate the meals and beverage big PepsiCo (PEP).
The inventory affords a strong 3.6% dividend yield and has elevated its dividend for over 50 years in a row. The corporate’s dividend may be very secure, and the inventory is appropriate for risk-averse earnings traders.
PepsiCo’s valuation is properly under its historic common, and it continues to submit strong outcomes.
Enterprise Overview
Pepsi-Cola was created within the late Nineties by Caleb Bradham, a North Carolina pharmacist. In the meantime, Frito-Lay, Inc. was shaped in 1961 from the merger of Frito Firm and the H. W. Lay Firm. In its present kind, PepsiCo got here collectively on account of the 1965 merger of Pepsi-Cola and Frito-Lay.
At the moment, PepsiCo is a worldwide meals and beverage big with a market capitalization above $215 billion and roughly $92 billion in annual income.
Its enterprise is break up roughly 60-40 when it comes to meals and beverage income. It is usually balanced geographically between the U.S. and the remainder of the world.
Supply: Investor Presentation
PepsiCo has a big portfolio and owns many standard manufacturers. A number of the firm’s main manufacturers embrace Pepsi and Mountain Dew sodas and non-sparkling drinks like Pure Leaf, Tropicana, Gatorade, and bottled water.
Along with PepsiCo’s core beverage manufacturers, it additionally has a big snacks enterprise beneath the Frito-Lay model. The corporate has additionally constructed a portfolio of more healthy meals, together with Quaker, Bare, and Sabra.
On February 4th, 2025, PepsiCo reported fourth-quarter and full-year outcomes for the interval ending December thirty first, 2024. For the quarter, income decreased 0.3% to $27.8 billion, which was $110 million under estimates. Adjusted earnings-per-share of $1.96 in contrast favorably to $1.78 within the prior yr and was $0.02 higher than anticipated.
For the yr, income grew 0.4% to $91.9 billion whereas adjusted earnings-per-share of $8.16 in comparison with $7.62 in 2023. Foreign money alternate decreased income by 2.0% and earnings-per-share by 4%.
Natural gross sales have been up 2.1% for the quarter and a couple of.0% for the yr. For the quarter, quantity for each meals and beverage have been up 1%. PepsiCo Drinks North America’s income was unchanged, however quantity fell 3%. Frito-Lay North America declined 2% whereas quantity was additionally down 3%. Quaker Meals North America was down 2%.
PepsiCo supplied an outlook for 2025 as properly, with the corporate anticipating mid-single-digit development for adjusted earnings-per-share development.
Development Prospects
PepsiCo has an extended historical past of regular development. Even in a difficult atmosphere on account of declining soda consumption, PepsiCo has continued its constant development.
We consider PepsiCo will generate 6% adjusted earnings-per-share development per yr over the following 5 years. Going ahead, two of PepsiCo’s most promising catalysts are development in more healthy meals and drinks and rising markets.
Giant soda firms like PepsiCo have needed to adapt to a extra health-conscious shopper. To do that, PepsiCo has shifted its portfolio towards more healthy meals which are resonating extra strongly with altering shopper preferences.
As well as, PepsiCo has an enormous development alternative in rising markets like China, Africa, India, and Latin America.
Supply: Investor Presentation
These are under-developed areas of the world with massive shopper populations and excessive financial development charges.
Worldwide markets (notably rising ones) have been a development driver over the previous few years.
Final quarter, income in Europe was up 7%, aided largely by a 3% improve in beverage quantity and a 1% enchancment in meals quantity. Income in Latin America elevated 4%, Africa/Center East/South Asia was up 14%, and the Asia Pacific/Australia/New Zealand/China area grew 1%.
Aggressive Benefits & Recession Efficiency
PepsiCo has quite a few aggressive benefits, together with robust manufacturers and a worldwide scale. In all, PepsiCo has ~20 particular person manufacturers that every gather at the very least $1 billion in annual income. Sturdy manufacturers give PepsiCo optimum shelf house at retailers and pricing energy.
PepsiCo’s monetary power additionally permits the corporate to put money into analysis and improvement and promoting to retain its aggressive benefits.
For instance, PepsiCo invests billions every year in analysis and improvement to innovate new merchandise and packaging designs. As well as, PepsiCo recurrently spends greater than $2 billion every year on promoting to keep up market share and construct model fairness with customers.
PepsiCo’s aggressive benefits and robust manufacturers make the corporate extremely worthwhile, even throughout recessions. Meals and drinks at all times retain a sure stage of demand, which is why the corporate held up so properly through the Nice Recession.
PepsiCo’s earnings-per-share all through the Nice Recession of 2007-2009 are listed under:
- 2007 earnings-per-share of $3.34
- 2008 earnings-per-share of $3.21 (3.9% decline)
- 2009 earnings-per-share of $3.77 (17% improve)
- 2010 earnings-per-share of $3.91 (3.7% improve)
As you’ll be able to see, PepsiCo’s earnings-per-share declined solely modestly in 2008. The corporate then elevated earnings by practically 20% in 2009, which may be very spectacular. Earnings continued to develop as soon as the recession ended.
The corporate reported robust development in 2020 and 2021 when the coronavirus pandemic despatched the U.S. economic system right into a recession. Subsequently, PepsiCo is a recession-resistant enterprise.
Valuation & Anticipated Returns
We count on PepsiCo to generate earnings per share of $8.59 for 2025. Based mostly on this, the inventory trades for a price-to-earnings ratio of 18.3. Our truthful worth estimate is a price-to-earnings ratio of 24.0. Subsequently, PEP inventory seems undervalued. A number of growth may add 5.6% to yearly annual returns over the following 5 years.
Earnings-per-share development and the inventory’s dividend yield may even drive complete returns. We count on PepsiCo to develop earnings-per-share every year by 6%. As well as, PepsiCo additionally has a 3.6% present dividend yield.
The mix of valuation adjustments, earnings development, and dividends leads to complete anticipated returns of 14.6% per yr over the following 5 years.
PepsiCo’s dividend is safe, with a projected payout ratio of about 66% for 2025. This provides PepsiCo sufficient room to proceed growing the dividend at a price in step with the expansion price of its adjusted EPS.
Given the full return potential and the corporate’s total high quality, we price shares of PepsiCo as a purchase.
Closing Ideas
PepsiCo is a really robust enterprise with a number of category-leading manufacturers. Investing closely in new merchandise and acquisitions will doubtless proceed rising gross sales and earnings for a few years.
Shareholders ought to proceed to profit from PepsiCo’s robust enterprise by annual dividend will increase. Few different firms within the shopper staples sector can match its dividend development historical past. PepsiCo lately achieved Dividend King standing in February 2022.
We consider that PepsiCo stays a invaluable holding for a dividend development portfolio.
Moreover, the next Positive Dividend databases comprise probably the most dependable dividend growers in our funding universe:
In case you’re on the lookout for shares with distinctive dividend traits, think about the next Positive Dividend databases:
The key home inventory market indices are one other strong useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month:
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