An In-depth Look at the Upcoming Dividend and Its Sustainability
PepsiCo Inc (PEP, Financial) recently announced a dividend of $1.36 per share, set to be payable on June 28, 2024, with the ex-dividend date on June 7, 2024. As investors anticipate this forthcoming dividend payment, it is crucial to examine PepsiCo Inc's dividend history, current yield, and growth rates. This analysis, supported by data from GuruFocus, aims to evaluate the sustainability and potential growth of PepsiCo Inc's dividends.
What Does PepsiCo Inc Do?
PepsiCo is a prominent global player in both the snacks and beverages industry, boasting a portfolio of well-known brands such as Pepsi, Mountain Dew, Gatorade, Lay's, Cheetos, and Doritos. The company leads the global savory snacks market and ranks as the second-largest beverage provider worldwide. PepsiCo's product lineup includes a diverse range of carbonated soft drinks, waters, sports, and energy drinks. The company generates about 55% of its revenue from convenience foods, while beverages account for the remainder. With significant manufacturing and distribution capabilities both in the US and internationally, international markets contribute to 40% of PepsiCo's total sales and one-third of its operating profits.
A Glimpse at PepsiCo Inc's Dividend History
Since 1973, PepsiCo Inc has maintained a reliable dividend payment record, distributing dividends quarterly. The company has achieved the status of a dividend king, having increased its dividend annually for the past 51 years. This consistent growth in dividends underscores PepsiCo Inc's financial stability and commitment to returning value to shareholders.
Breaking Down PepsiCo Inc's Dividend Yield and Growth
Currently, PepsiCo Inc boasts a trailing dividend yield of 2.93% and a forward dividend yield of 3.13%, indicating expectations of increased dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 7.10%, with a slight decrease to 6.50% over a five-year period. Over the last decade, the annual growth rate of dividends per share stands at 7.90%. Today, the 5-year yield on cost for PepsiCo Inc stock is approximately 4.01%.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of PepsiCo Inc's dividends, the dividend payout ratio is a critical metric. As of March 31, 2024, the payout ratio stands at 0.65, indicating a healthy balance between dividend payments and earnings retention for future growth and stability. Additionally, PepsiCo Inc's profitability rank is 9 out of 10, reflecting strong earnings capabilities compared to its peers. Consistent positive net income over the past decade further solidifies its robust profitability profile.
Growth Metrics: The Future Outlook
PepsiCo Inc's growth trajectory is promising, with a growth rank of 9 out of 10. The company's revenue per share and 3-year revenue growth rate of 9.40% yearly outperform approximately 51.92% of global competitors. Additionally, the 3-year EPS growth rate of 11.30% per year and a 5-year EBITDA growth rate of 6.60% further demonstrate PepsiCo Inc's capacity to sustain dividend payments through continued earnings growth.
Conclusion
Considering PepsiCo Inc's consistent dividend growth, a prudent payout ratio, strong profitability, and robust growth metrics, the company stands out as a reliable choice for dividend-seeking investors. The upcoming dividend payment, alongside the historical increase in dividend payouts, underscores PepsiCo Inc's commitment to shareholder returns. For those looking to explore further, GuruFocus Premium provides tools like the High Dividend Yield Screener to discover more high-yield investment opportunities.
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.
