Friday, August 22, 2014

PepsiCo (PEP) Dividend Stock Analysis 2014

PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). The company is a dividend aristocrat which has increased distributions for 42 years in a row. PepsiCo is also one of the 60 companies which could be purchased commission-free using Loyal3, with as little as $10.

The company has managed to deliver 7.70% average increase in annual EPS over the past decade, while the annual dividend payment has increased by 13.50% per year over the past decade, which is higher than the growth in EPS.

Currently, the company is attractively valued as it sells for 19.70 times forward earnings and yields 2.90%. It is slightly more expensive than Coca-Cola, which sells for 19 times forward earnings and has the same yield. The pure play on North American soda is Dr. Pepper Snapple (DPS) is cheaper at 17 times forward earnings and a current yield of 2.70%. I like PepsiCo, but it is selling at the highest point I would be willing to put money at. As a result, I would likely not put money there, unless valuation gets better or unless I run out of other ideas.



Full Disclosure: Long PEP, KO, DPS

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