PepsiCo (PEP): A Dividend Stock Story
Okay, so you know how everyone's been piling into dividend stocks lately? It's become this huge thing, the idea that steady dividend increases mean better long-term returns. Makes sense, right? But are they *all* created equal? Let's talk about PepsiCo (PEP), a big name in the dividend world, and see how it measures up. I've been looking at it closely, especially considering its place in our recent list of the 15 Best High-Yield Dividend Stocks for 2025 and Beyond.
The High-Yield Dividend Dilemma
The research shows dividend-growing companies generally do pretty well. But some studies, like ones from Ned Davis Research, suggest that high-yield dividend stocks might be *even* better. A stock's dividend yield – that's your annual dividend divided by the share price – shows you the income per dollar invested. Sounds great, but high yields can also mean higher risk and volatility. It's a bit of a double-edged sword.
Think about it:
- More Volatility: High-yield stocks tend to bounce around more in price.
- Portfolio Juggling: All that price movement means you might be adjusting your portfolio more often.
- Dividend Cuts? Yikes: A high yield sometimes means the stock price is falling, which can signal trouble and lead to dividend cuts. Not good.
Financial advisors always say do your homework. Don't just chase the yield! Look at the company's overall health – its balance sheet, its earnings-per-share (EPS) growth. As Jason Alonzo of Harbor Capital Advisors put it, "Make sure the company has a strong balance sheet and its prospects for earnings-per-share growth are strong, so the company is well-positioned to maintain dividend payments in the future even if there is a recession." Wise words.
PepsiCo (PEP): A 54-Year Run (But a Recent Blip)
PepsiCo (PEP) is a huge player in food and drinks, and they’ve had an amazing 54-year streak of dividend increases. That’s impressive! As of May 9th, 2025, PEP's dividend yield was 4.36%, putting it ninth on our best high-yield list. But here’s the twist: PEP's stock price has dropped over 13% since the start of 2025. Why? Lowered guidance – they're projecting flat core EPS growth.
First Quarter 2025: The Reality Check
Revenue was $17.9 billion – better than analysts expected. But still, it was down 1.8% year-over-year. Beverage volume was flat, and convenient foods sales fell 3%. It kinda felt like watching a slow-motion trainwreck – weaker consumer demand is a real thing.
Even with all this, PepsiCo announced a 5% increase in its quarterly dividend. They’re clearly committed to returning value to shareholders. But their revised outlook – a 3% decline in core EPS for 2025 – is a serious concern. It shows you need to look beyond the headlines.
PEP: The Bigger Picture
PEP's long dividend history and that recent dividend increase are positive. But the current financial performance and lowered guidance? That needs careful consideration. Frankly, our analysis suggests some other deeply undervalued dividend stocks on our list look more promising, possibly with faster returns. That’s why PEP is only number nine on our list.
The Bottom Line
PepsiCo is still a major player in high-yield dividend stocks, with a great track record. But their recent performance and lowered projections mean you need to really dig into their financials before investing. The dividend market has tons of options right now. By focusing on a company's underlying strength and growth potential, *along* with its dividend history, you can build a stronger, more diversified portfolio. You might even want to check out our report on deeply undervalued dividend stocks for some potentially better options.
