Stable Dividend Growth Investment Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy PEP?
Source: Fool
- American States Water Overview: American States Water (AWR) has paid dividends since 1931 and has raised them annually for 70 years, making it a Dividend King with a current yield of 2.7%, reflecting its strong financial health.
- T. Rowe Price Growth Potential: T. Rowe Price (TROW) manages $1.78 trillion in assets, offering a dividend yield of 5.3%, and has reduced its payout ratio from 71.6% to 55%, enhancing its appeal as a steady growth stock.
- PepsiCo's Risk and Reward: PepsiCo (PEP) paid $7.92 billion in dividends in 2025, with a payout ratio of 105%, yet its revenue grew by 5.6% in Q4, indicating future growth potential despite cash flow pressures from acquisitions.
- Diversifying Dividend Portfolio: By combining the stability of American States Water, the high yield of T. Rowe Price, and the growth potential of PepsiCo, investors can create a diversified dividend portfolio to mitigate risk and enhance returns.
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Analyst Views on PEP
Wall Street analysts forecast PEP stock price to fall
12 Analyst Rating
6 Buy
6 Hold
0 Sell
Moderate Buy
Current: 167.200
Low
144.00
Averages
161.90
High
172.00
Current: 167.200
Low
144.00
Averages
161.90
High
172.00
About PEP
PepsiCo, Inc. is a global beverage and convenient food company. The Company’s segments include PepsiCo Foods North America (PFNA), PepsiCo Beverages North America (PBNA), International Beverages Franchise (IB Franchise), Europe, Middle East and Africa (EMEA), Latin America Foods (LatAm Foods), and Asia Pacific Foods. PFNA segment includes all of its convenient food businesses in the United States and Canada. PBNA segment includes all of its beverage businesses in the United States and Canada. IB Franchise segment includes its international franchise beverage businesses, as well as its SodaStream business. EMEA segment includes its convenient food businesses and beverage businesses with Company-owned bottlers in Europe, the Middle East and Africa. LatAm Foods segment includes all of its convenient food businesses in Latin America. Asia Pacific Foods segment consists of its convenient food businesses in Asia Pacific, including China, Australia and New Zealand, as well as India.
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.
Stable Dividend Growth Investment Opportunities
- American States Water Overview: American States Water (AWR) has paid dividends since 1931 and has raised them annually for 70 years, making it a Dividend King with a current yield of 2.7%, reflecting its strong financial health.
- T. Rowe Price Growth Potential: T. Rowe Price (TROW) manages $1.78 trillion in assets, offering a dividend yield of 5.3%, and has reduced its payout ratio from 71.6% to 55%, enhancing its appeal as a steady growth stock.
- PepsiCo's Risk and Reward: PepsiCo (PEP) paid $7.92 billion in dividends in 2025, with a payout ratio of 105%, yet its revenue grew by 5.6% in Q4, indicating future growth potential despite cash flow pressures from acquisitions.
- Diversifying Dividend Portfolio: By combining the stability of American States Water, the high yield of T. Rowe Price, and the growth potential of PepsiCo, investors can create a diversified dividend portfolio to mitigate risk and enhance returns.
See More
Starbucks and PepsiCo Present Dividend Investment Opportunities
- Starbucks Performance Recovery: After several challenging years, Starbucks is witnessing an uptick in transactions and average ticket size, driving a 4% year-over-year increase in global comparable store sales, indicating early success of its 'Back to Starbucks' plan.
- Dividend Growth Potential: With a quarterly dividend of $0.62 and an annualized dividend of $2.48, Starbucks is nearing its sustainable payout limit; however, under CEO Brian Niccol's turnaround strategy, further increases are anticipated as the business improves.
- PepsiCo's Steady Growth: Over the past five years, PepsiCo has achieved a 31% revenue increase and a 19% rise in free cash flow, with the latest free cash flow reaching $7.6 billion, demonstrating resilience amid high inflation and pandemic challenges.
- Future Dividend Increase: PepsiCo plans to raise its full-year dividend by 4% to $5.92 in 2026, with the current quarterly dividend at $1.4225 and an annualized dividend of $5.69, indicating a strong outlook for continued dividend growth.
See More
Coca-Cola's 2025 Earnings Analysis
- Performance Growth: Coca-Cola reported a 5% organic sales increase for 2025, demonstrating relative strength amid industry-wide headwinds, indicating brand resilience and stable market demand despite shifting consumer preferences towards healthier options.
- Future Outlook: The company projects organic sales growth of 4% to 5% for 2026, which, while lower than 2025's growth rate, still reflects its potential to maintain growth in a competitive market; however, investor disappointment led to a stock price decline.
- Dividend Appeal: As a Dividend King with over six decades of annual dividend increases, Coca-Cola offers a 2.7% dividend yield, which, although lower than PepsiCo's 3.4%, still provides a relatively stable income source for conservative investors.
- Market Competition: While Coca-Cola performs well in the beverage sector, PepsiCo's diversified business model offers more long-term growth opportunities, with projected organic sales growth of 2% to 4% for 2026, showcasing its resilience amid industry challenges.
See More
Coca-Cola 2025 Earnings Report Analysis
- Organic Sales Growth: Coca-Cola reported a 5% organic sales increase for 2025, demonstrating strong market performance despite industry headwinds; however, the guidance for 2026 suggests a slowdown to 4%-5% growth, reflecting shifts in consumer preferences towards healthier options and tightening budgets.
- Investor Reaction: Investors reacted negatively to Coca-Cola's cautious outlook, resulting in a stock sell-off that indicates market concerns regarding the company's future profitability, potentially impacting its short-term investment appeal.
- Comparison with PepsiCo: PepsiCo's organic sales grew only 1.7% in 2025, indicating greater industry pressures; although its dividend yield of 3.4% surpasses Coca-Cola's 2.7%, its overall performance remains inferior to Coca-Cola's.
- Long-Term Outlook: PepsiCo projects organic sales growth of 2%-4% for 2026, still trailing Coca-Cola's expectations, yet its diversified business model offers more long-term growth opportunities despite facing short-term challenges.
See More
Looking for Stocks Resilient to AI? Consider HALO
- Limitations of AI: AI cannot perform physical tasks such as cooking, delivering packages, or farming.
- Human Dependency: Despite advancements in AI, human involvement is still essential for various everyday activities.
See More
This Steady Dividend ETF Has Gained 10% in 2026, Driven by Caterpillar.
- Investor Patience: Investors focusing on reliable dividend payers have needed to be patient recently.
- Market Performance in 2026: In 2026, this patience is rewarded as companies like Caterpillar, Exxon Mobil, and Clorox achieve returns exceeding 25%.
See More
Stable Dividend Growth Investment Opportunities
- American States Water Overview: American States Water (AWR) has paid dividends since 1931 and has raised them annually for 70 years, making it a Dividend King with a current yield of 2.7%, reflecting its strong financial health.
- T. Rowe Price Growth Potential: T. Rowe Price (TROW) manages $1.78 trillion in assets, offering a dividend yield of 5.3%, and has reduced its payout ratio from 71.6% to 55%, enhancing its appeal as a steady growth stock.
- PepsiCo's Risk and Reward: PepsiCo (PEP) paid $7.92 billion in dividends in 2025, with a payout ratio of 105%, yet its revenue grew by 5.6% in Q4, indicating future growth potential despite cash flow pressures from acquisitions.
- Diversifying Dividend Portfolio: By combining the stability of American States Water, the high yield of T. Rowe Price, and the growth potential of PepsiCo, investors can create a diversified dividend portfolio to mitigate risk and enhance returns.
See More
Starbucks and PepsiCo Present Dividend Investment Opportunities
- Starbucks Performance Recovery: After several challenging years, Starbucks is witnessing an uptick in transactions and average ticket size, driving a 4% year-over-year increase in global comparable store sales, indicating early success of its 'Back to Starbucks' plan.
- Dividend Growth Potential: With a quarterly dividend of $0.62 and an annualized dividend of $2.48, Starbucks is nearing its sustainable payout limit; however, under CEO Brian Niccol's turnaround strategy, further increases are anticipated as the business improves.
- PepsiCo's Steady Growth: Over the past five years, PepsiCo has achieved a 31% revenue increase and a 19% rise in free cash flow, with the latest free cash flow reaching $7.6 billion, demonstrating resilience amid high inflation and pandemic challenges.
- Future Dividend Increase: PepsiCo plans to raise its full-year dividend by 4% to $5.92 in 2026, with the current quarterly dividend at $1.4225 and an annualized dividend of $5.69, indicating a strong outlook for continued dividend growth.
See More
Coca-Cola's 2025 Earnings Analysis
- Performance Growth: Coca-Cola reported a 5% organic sales increase for 2025, demonstrating relative strength amid industry-wide headwinds, indicating brand resilience and stable market demand despite shifting consumer preferences towards healthier options.
- Future Outlook: The company projects organic sales growth of 4% to 5% for 2026, which, while lower than 2025's growth rate, still reflects its potential to maintain growth in a competitive market; however, investor disappointment led to a stock price decline.
- Dividend Appeal: As a Dividend King with over six decades of annual dividend increases, Coca-Cola offers a 2.7% dividend yield, which, although lower than PepsiCo's 3.4%, still provides a relatively stable income source for conservative investors.
- Market Competition: While Coca-Cola performs well in the beverage sector, PepsiCo's diversified business model offers more long-term growth opportunities, with projected organic sales growth of 2% to 4% for 2026, showcasing its resilience amid industry challenges.
See More
Coca-Cola 2025 Earnings Report Analysis
- Organic Sales Growth: Coca-Cola reported a 5% organic sales increase for 2025, demonstrating strong market performance despite industry headwinds; however, the guidance for 2026 suggests a slowdown to 4%-5% growth, reflecting shifts in consumer preferences towards healthier options and tightening budgets.
- Investor Reaction: Investors reacted negatively to Coca-Cola's cautious outlook, resulting in a stock sell-off that indicates market concerns regarding the company's future profitability, potentially impacting its short-term investment appeal.
- Comparison with PepsiCo: PepsiCo's organic sales grew only 1.7% in 2025, indicating greater industry pressures; although its dividend yield of 3.4% surpasses Coca-Cola's 2.7%, its overall performance remains inferior to Coca-Cola's.
- Long-Term Outlook: PepsiCo projects organic sales growth of 2%-4% for 2026, still trailing Coca-Cola's expectations, yet its diversified business model offers more long-term growth opportunities despite facing short-term challenges.
See More
Looking for Stocks Resilient to AI? Consider HALO
- Limitations of AI: AI cannot perform physical tasks such as cooking, delivering packages, or farming.
- Human Dependency: Despite advancements in AI, human involvement is still essential for various everyday activities.
See More
This Steady Dividend ETF Has Gained 10% in 2026, Driven by Caterpillar.
- Investor Patience: Investors focusing on reliable dividend payers have needed to be patient recently.
- Market Performance in 2026: In 2026, this patience is rewarded as companies like Caterpillar, Exxon Mobil, and Clorox achieve returns exceeding 25%.
See More
