PepsiCo Inc's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance of PepsiCo Inc (NASDAQ:PEP)
PepsiCo Inc (NASDAQ:PEP) recently announced a dividend of $1.27 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-02-29. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into PepsiCo Inc's dividend performance and assess its sustainability.
What Does PepsiCo Inc Do?
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PepsiCo is a global leader in snacks and beverages, owning well-known household brands including Pepsi, Mountain Dew, Gatorade, Lay's, Cheetos, and Doritos, among others. The company dominates the global savory snacks market and also ranks as the second-largest beverage provider in the world (behind Coca-Cola) with diversified exposure to carbonated soft drinks, or CSD, as well as water, sports, and energy offerings. Convenience foods account for approximately 55% of its total revenue, with beverages making up the rest. PepsiCo owns the bulk of its manufacturing and distribution capacity in the United States and overseas. International markets make up 40% of total sales and one third of operating profits.
A Glimpse at PepsiCo Inc's Dividend History
PepsiCo Inc has maintained a consistent dividend payment record since 1973, distributing dividends on a quarterly basis. The stock is recognized as a dividend king, a prestigious title awarded to companies that have increased their dividend each year for at least the past 51 years. This track record reflects a strong commitment to shareholder returns.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down PepsiCo Inc's Dividend Yield and Growth
As of today, PepsiCo Inc currently has a 12-month trailing dividend yield of 2.95% and a 12-month forward dividend yield of 3.03%. This indicates an anticipated increase in dividend payments over the next 12 months. Over the past three years, PepsiCo Inc's annual dividend growth rate was 7.10%. This rate decreased slightly to 6.50% per year over a five-year period. However, over the past decade, PepsiCo Inc's annual dividends per share growth rate stands at 7.90%. Based on PepsiCo Inc's dividend yield and five-year growth rate, the 5-year yield on cost of PepsiCo Inc stock is approximately 4.04%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, PepsiCo Inc's dividend payout ratio is 0.65.
PepsiCo Inc's profitability rank, a measure of the company's earnings prowess relative to its peers, is 9 out of 10, indicating good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
PepsiCo Inc's strong growth rank of 9 out of 10 suggests that the company's growth trajectory is promising relative to its competitors. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with revenue increasing by approximately 9.40% per year on average, outperforming about 67.33% of global competitors.
The 3-year EPS growth rate underscores PepsiCo Inc's ability to grow its earnings, vital for sustaining dividends, with an average annual increase of 11.30%, outperforming about 53.26% of global competitors. Additionally, PepsiCo Inc's 5-year EBITDA growth rate of 6.60% outperforms approximately 46.27% of global competitors.
Conclusion: Evaluating PepsiCo Inc's Dividend Prospects
In conclusion, PepsiCo Inc's upcoming dividend, historical dividend growth, and current payout ratio reflect a strong commitment to shareholder returns. The company's robust profitability and positive growth metrics provide a solid foundation for future dividend sustainability. Investors looking for reliable dividend-paying stocks may find PepsiCo Inc an attractive option. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium offers the High Dividend Yield Screener as a valuable tool.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
