Coca-Cola Outshines PepsiCo for Dividend Investors
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5d ago
0mins
Source: Fool
- Dividend Yield Comparison: PepsiCo offers a dividend yield of 3.8%, surpassing Coca-Cola's 2.8%, yet Coca-Cola's superior earnings growth and profit margins indicate a stronger investment potential.
- Earnings Growth Discrepancy: Coca-Cola reported a 30% adjusted earnings growth last quarter, while PepsiCo experienced an 11% decline, highlighting Coca-Cola's rapidly improving core operational profitability, which may attract more investor interest.
- Profit Margin Analysis: Coca-Cola's profit margin stands at 27.3%, significantly above the industry average of 13.4% and PepsiCo's 7.8%, reflecting Coca-Cola's advantages in pricing power and operational efficiency.
- Dividend Safety: While both companies are Dividend Kings, PepsiCo's payout ratio of 105% raises concerns about its ability to sustain dividends, whereas Coca-Cola's 66% payout ratio indicates stronger financial health.
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Analyst Views on KO
Wall Street analysts forecast KO stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for KO is 79.33 USD with a low forecast of 71.00 USD and a high forecast of 85.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
13 Buy
1 Hold
0 Sell
Strong Buy
Current: 78.510
Low
71.00
Averages
79.33
High
85.00
Current: 78.510
Low
71.00
Averages
79.33
High
85.00
About KO
The Coca-Cola Company is a beverage company. The Company's segments include Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments. It sells multiple brands across several beverage categories worldwide. Its portfolio of sparkling soft drink brands includes Coca-Cola, Sprite and Fanta. Its water, sports, coffee and tea brands include Dasani, smartwater, vitaminwater, Topo Chico, BODYARMOR, Powerade, Costa, Georgia, Fuze Tea, Gold Peak and Ayataka. Its juice, value-added dairy and plant-based beverage brands include Minute Maid, Simply, innocent, Del Valle, fairlife and AdeS. It operates in two lines of business: concentrate operations and finished product operations. Its concentrate operations sell beverage concentrates, syrups, including fountain syrups, and certain finished beverages to authorized bottling operations. Its finished product operations sell sparkling soft drinks and a variety of other finished beverages.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Coca-Cola Rises for Seven Days, IPO Plans Draw Attention
- Strong Stock Performance: Coca-Cola (NYSE:KO) closed 0.80% higher at $79.14 on Friday, marking its seventh consecutive day of gains, demonstrating relative strength amid broader market declines, particularly as the S&P 500 fell 2.58% during the same period.
- IPO Plans Attract Attention: The company is exploring an initial public offering for its Indian bottling unit, Hindustan Coca-Cola Beverages, targeting proceeds of about $1 billion and a valuation nearing $10 billion, which is seen as a strategic move to unlock value from its bottling operations.
- Divergent Analyst Ratings: According to Seeking Alpha's Quant rating, Coca-Cola holds a 'Hold' rating with a score of 3.29, indicating strong profitability but pressures on growth and valuation, while Wall Street analysts generally rate the stock as a Buy, with 19 analysts giving it a Buy or higher rating.
- Cautious Market Outlook: Despite Coca-Cola's resilient business model, Agar Capital maintains a Buy rating with a $90 price target, highlighting risks such as a strong dollar, pressure on low-income consumers, and an upcoming CEO transition that could impact future performance.
See More
Buffett's Optimism for Coca-Cola and Domino's Pizza
- Coca-Cola Dividend Growth: Berkshire Hathaway's 400 million shares of Coca-Cola generated $816 million in dividends in 2025, with expectations for further increases in 2026, highlighting the company's strong cash flow and shareholder return capabilities.
- Strong Financial Performance: Coca-Cola reported a 31.9% adjusted operating margin in Q3 2025, up 120 basis points year-over-year, driven by 6% organic revenue growth, indicating a solid foundation for continued dividend increases in the future.
- Domino's Market Advantage: Added to Berkshire's portfolio in mid-2024, Domino's has shown strong same-store sales growth and effective supply chain management, with a goal of achieving 3% same-store sales growth in 2026, demonstrating resilience in a competitive market.
- Dividend Increase Potential: With an average dividend growth rate of 17.4% over the past five years and a current yield of 1.76%, Domino's is expected to raise its dividend again in the upcoming Q4 earnings report, further boosting investor confidence.
See More
Buffett Favors Stocks with Sustainable Dividends
- Coca-Cola's Dividend Potential: Coca-Cola paid $816 million in dividends in 2025, with expectations for further growth in 2026, showcasing strong dividend capacity backed by a 63-year history of increases and a reasonable payout ratio of 69% amidst stable cash flows.
- Robust Financial Performance: The company reported an adjusted operating margin of 31.9% in Q3 2025, a 120 basis point increase year-over-year, driven by 6% organic revenue growth, highlighting the strength of its brand portfolio and market adaptability.
- Domino's Growth Outlook: Buffett began acquiring Domino's shares in mid-2024, with analysts projecting an 11% rise in earnings per share for 2026, while its sub-40% payout ratio provides ample room for future dividend increases, having averaged 17.4% growth over the past five years.
- Competitive Market Advantage: Domino's achieved an 8.7% increase in carryout sales through strategic partnerships with delivery platforms and a fortressing strategy, demonstrating success in enhancing customer convenience and profitability in a competitive landscape.
See More
U.S. Stock Futures Decline Amid Cautious Market Sentiment
- Market Sentiment Dips: Following a strong rebound on Friday, U.S. stock futures declined on Monday, reflecting cautious market sentiment amid concerns over upcoming economic data, particularly regarding inflation and labor market changes.
- Japanese Market Surge: The Nikkei 225 index broke the 57,000-point barrier for the first time, driven by Prime Minister Sanae Takaichi's landslide election victory and a high-profile endorsement from Trump, indicating a robust recovery in Japan that may attract more international investors.
- Stable Treasury Yields: The 10-year Treasury bond yield stood at 4.22%, while the two-year yield was at 3.50%, suggesting market expectations for the Federal Reserve's future interest rate policy are stabilizing, with an 84.2% likelihood of rates remaining unchanged in March.
- Stock Dynamics: FedEx shares rose 0.47% after announcing plans to acquire InPost for €7.8 billion, showcasing a proactive business expansion strategy, while ON Semiconductor fell 1.38% as analysts expect quarterly earnings to miss expectations.
See More
Movers: Hims & Hers, Novo Nordisk, Micron, Kroger, STMicroelectronics, Nvidia, and Others
- Stock Market Trends: Stock futures were declining on Monday as investors expressed concerns about the sustainability of a recent relief rally.
- Investor Sentiment: There is a prevailing uncertainty among investors regarding the market's ability to maintain upward momentum following last week's gains.
See More
Key Earnings Reports and Economic Outlook This Week
- DuPont Earnings Expectations: DuPont is expected to report earnings of $0.43 per share and revenue of $1.69 billion for Q4 2025, with analysts noting ongoing pressure in short-cycle businesses, while slight improvements in the automotive sector may influence investor sentiment.
- Cisco's AI Focus: Cisco anticipates earnings of $1.02 per share and revenue of $15.1 billion for Q2 FY2026, with CEO highlighting a major multi-year campus networking refresh, making AI infrastructure demand a critical growth driver.
- Importance of Employment Report: The January employment report is expected to show an addition of 80,000 nonfarm payrolls and an unchanged unemployment rate of 4.4%, directly impacting private consumption and U.S. GDP, making it crucial for investors to monitor.
- Consumer Price Index Insights: The January CPI is projected to increase by 2.5% year-over-year, with core CPI rising by 2.6%, providing essential inflation details despite not being the Fed's preferred measure, particularly regarding persistent shelter cost inflation.
See More
Coca-Cola Rises for Seven Days, IPO Plans Draw Attention
- Strong Stock Performance: Coca-Cola (NYSE:KO) closed 0.80% higher at $79.14 on Friday, marking its seventh consecutive day of gains, demonstrating relative strength amid broader market declines, particularly as the S&P 500 fell 2.58% during the same period.
- IPO Plans Attract Attention: The company is exploring an initial public offering for its Indian bottling unit, Hindustan Coca-Cola Beverages, targeting proceeds of about $1 billion and a valuation nearing $10 billion, which is seen as a strategic move to unlock value from its bottling operations.
- Divergent Analyst Ratings: According to Seeking Alpha's Quant rating, Coca-Cola holds a 'Hold' rating with a score of 3.29, indicating strong profitability but pressures on growth and valuation, while Wall Street analysts generally rate the stock as a Buy, with 19 analysts giving it a Buy or higher rating.
- Cautious Market Outlook: Despite Coca-Cola's resilient business model, Agar Capital maintains a Buy rating with a $90 price target, highlighting risks such as a strong dollar, pressure on low-income consumers, and an upcoming CEO transition that could impact future performance.
See More
Buffett's Optimism for Coca-Cola and Domino's Pizza
- Coca-Cola Dividend Growth: Berkshire Hathaway's 400 million shares of Coca-Cola generated $816 million in dividends in 2025, with expectations for further increases in 2026, highlighting the company's strong cash flow and shareholder return capabilities.
- Strong Financial Performance: Coca-Cola reported a 31.9% adjusted operating margin in Q3 2025, up 120 basis points year-over-year, driven by 6% organic revenue growth, indicating a solid foundation for continued dividend increases in the future.
- Domino's Market Advantage: Added to Berkshire's portfolio in mid-2024, Domino's has shown strong same-store sales growth and effective supply chain management, with a goal of achieving 3% same-store sales growth in 2026, demonstrating resilience in a competitive market.
- Dividend Increase Potential: With an average dividend growth rate of 17.4% over the past five years and a current yield of 1.76%, Domino's is expected to raise its dividend again in the upcoming Q4 earnings report, further boosting investor confidence.
See More
Buffett Favors Stocks with Sustainable Dividends
- Coca-Cola's Dividend Potential: Coca-Cola paid $816 million in dividends in 2025, with expectations for further growth in 2026, showcasing strong dividend capacity backed by a 63-year history of increases and a reasonable payout ratio of 69% amidst stable cash flows.
- Robust Financial Performance: The company reported an adjusted operating margin of 31.9% in Q3 2025, a 120 basis point increase year-over-year, driven by 6% organic revenue growth, highlighting the strength of its brand portfolio and market adaptability.
- Domino's Growth Outlook: Buffett began acquiring Domino's shares in mid-2024, with analysts projecting an 11% rise in earnings per share for 2026, while its sub-40% payout ratio provides ample room for future dividend increases, having averaged 17.4% growth over the past five years.
- Competitive Market Advantage: Domino's achieved an 8.7% increase in carryout sales through strategic partnerships with delivery platforms and a fortressing strategy, demonstrating success in enhancing customer convenience and profitability in a competitive landscape.
See More
U.S. Stock Futures Decline Amid Cautious Market Sentiment
- Market Sentiment Dips: Following a strong rebound on Friday, U.S. stock futures declined on Monday, reflecting cautious market sentiment amid concerns over upcoming economic data, particularly regarding inflation and labor market changes.
- Japanese Market Surge: The Nikkei 225 index broke the 57,000-point barrier for the first time, driven by Prime Minister Sanae Takaichi's landslide election victory and a high-profile endorsement from Trump, indicating a robust recovery in Japan that may attract more international investors.
- Stable Treasury Yields: The 10-year Treasury bond yield stood at 4.22%, while the two-year yield was at 3.50%, suggesting market expectations for the Federal Reserve's future interest rate policy are stabilizing, with an 84.2% likelihood of rates remaining unchanged in March.
- Stock Dynamics: FedEx shares rose 0.47% after announcing plans to acquire InPost for €7.8 billion, showcasing a proactive business expansion strategy, while ON Semiconductor fell 1.38% as analysts expect quarterly earnings to miss expectations.
See More
Movers: Hims & Hers, Novo Nordisk, Micron, Kroger, STMicroelectronics, Nvidia, and Others
- Stock Market Trends: Stock futures were declining on Monday as investors expressed concerns about the sustainability of a recent relief rally.
- Investor Sentiment: There is a prevailing uncertainty among investors regarding the market's ability to maintain upward momentum following last week's gains.
See More
Key Earnings Reports and Economic Outlook This Week
- DuPont Earnings Expectations: DuPont is expected to report earnings of $0.43 per share and revenue of $1.69 billion for Q4 2025, with analysts noting ongoing pressure in short-cycle businesses, while slight improvements in the automotive sector may influence investor sentiment.
- Cisco's AI Focus: Cisco anticipates earnings of $1.02 per share and revenue of $15.1 billion for Q2 FY2026, with CEO highlighting a major multi-year campus networking refresh, making AI infrastructure demand a critical growth driver.
- Importance of Employment Report: The January employment report is expected to show an addition of 80,000 nonfarm payrolls and an unchanged unemployment rate of 4.4%, directly impacting private consumption and U.S. GDP, making it crucial for investors to monitor.
- Consumer Price Index Insights: The January CPI is projected to increase by 2.5% year-over-year, with core CPI rising by 2.6%, providing essential inflation details despite not being the Fed's preferred measure, particularly regarding persistent shelter cost inflation.
See More
