History is full of epic rivalries: boxers vs. briefs, the Whopper vs. the Big Mac, Yankees vs. Red Sox, Paris vs. Nicole. But foremost of all these storied conflicts, the Great Cola Wars -- the long-standing Coke vs. Pepsi showdown -- still has the power to divide even the closest of friends.
Despite our differences in soda pop preferences -- Dayana carries the banner of Diet Pepsi, while Alyce defends Diet Coke to the death -- we do agree that PepsiCo (NYSE: PEP ) is the brand best suited for investors' portfolios.
Introducing New Pepsi!
No, Pepsi isn't replacing its flagship formula, a la "New Coke." But this consumer giant has adopted a new and refreshing approach to everything it does, from top management down to the business of environmentally friendlier resource management.
Leading the charge is an extremely high-powered female CEO, who's driving the business in unconventional and highly effective ways.
Pepsi Chairwoman and CEO Indra Nooyi is a different kind of leader, and not just because she happens to be a woman in the upper echelon of a corporate landscape largely ruled by many, many men.
In 2006, she became Pepsi's first female CEO in its 40-plus year history, having previously held a management gig at Motorola (NYSE: MOT ) . This year marks the fifth consecutive year Nooyi has topped Fortune's "50 Most Powerful Women in Business" list.
Under Nooyi's leadership, Pepsi has executed on a lot of interesting plans. For example, Nooyi has made it plain that she wants to hire an inclusive workforce of people with different backgrounds.
Her commitment to employment diversification isn't just lip service: She puts her money where her mouth is. In 2008, she told Diversity magazine that she pins 50% of her annual bonus on achievement of diversity-based "people" goals.
In another check in the "exemplary leadership" column, this past year Nooyi requested that her base salary remain the same, even though her pay is considered below market value.
In a world where far too many CEOs and top executives seem more concerned with their huge paychecks than the long-term success of the companies they helm, seeing a CEO who indicates there's a point where a salary is "enough" is as refreshing as a cold Pepsi (or Gatorade, or Tropicana, or ...) on a hot summer day.
Winning the Pantry Wars
We mentioned the famous soda showdown earlier, but Pepsi's current and future business models make the old "Coke vs. Pepsi" war moot.
Beyond its signature soft drink, Pepsi's also the name behind Quaker Oats and Frito-Lay, and a host of brands like Doritos, Tostitos, Ruffles, Tropicana, Propel, and Gatorade. That's quite a diversified range of products, and definitely a bigger array of choices than beverage-centric rival Coca-Cola (NYSE: KO ) .
Under Nooyi, Pepsi's also trying to capitalize off of healthier eating trends, launching "good-for-you" products that it hopes to grow from $10 billion in sales now to $30 billion in the next decade.
Pepsi's most recent quarterly report included impressive earnings, boasting a 12% increase in profit and a 40% revenue increase, much of which owed to its recent acquisitions. Investors balked on word of Pepsi's plans to invest in emerging markets like China and Russia -- but such global investments are exactly what long-term investors should want to see. BusinessWeek recently discussed Nooyi's idea that emerging markets are actually "learning labs" for new products and potentially disruptive business models that could be imported back to the U.S.
Pepsi also has a lot of environmentally sustainable initiatives in the works, as the company devises sustainable manufacturing processes to reuse, recycle, and conserve precious resources. For example, last year its Frito-Lay unit converted one-third of its plants to "zero landfill" status with the rest to follow by 2011.
What's better than a bottle refund? A dividend!
In addition to being kinder to the environment, Pepsi has a history of being kind to shareholders. The company ranks among Standard & Poor's "dividend aristocrats," a title bestowed on companies that have paid -- and increased -- their dividends for at least 25 years.
Pepsi ranks No. 1 among its peers in the Food, Beverage and Tobacco industry, with a five-year dividend growth rate of 13.7%.
Top "dividend aristocrats" by yield in the Food, Beverage, and Tobacco industry:
5-Yr Dividend Growth Rate
|3. Brown-Forman (NYSE: BF-B )||1.9%||9.3%|
|4. Archer-Daniels-Midland (NYSE: ADM )||1.8%||12.6%|
Source: Capital IQ, a division of Standard & Poor's.
Check out that trailing yield! Investors who balk at the idea of paying 16 times earnings for what might seem like an old-school, slow-growth blue chip might want to ponder all the things Pepsi has going for it.
With so much girl power at Pepsi's disposal, it's a solid contender for any gal's (or guy's) portfolio. Follow Pepsi in our My Watchlist feature, and check out last week's episode of Stock Picks for Chicks, where we dissected a popular retail stock.