PepsiCo (NASDAQ:PEP) and Anheuser-Busch InBev (NYSE:BUD) produce some of the most well-known beverages in the world. PepsiCo sells drinks like Pepsi, 7-Up, Mountain Dew, Tropicana, Gatorade, Lipton, and Aquafina. It also sells packaged foods through Frito-Lay and Quaker Foods.

AB InBev, the world's largest brewer, was created from the combination of Interbrew in Belgium, AmBev in Brazil, SABMiller in London, and Anheuser-Busch in the U.S. It owns over 500 brands of beers, including Budweiser, Michelob, Stella Artois, Cass, and Hoegaarden. It's also acquired popular craft beer brands like Karbach, Goose Island, Blue Point, and Golden Road in recent years.

Chilled canned drinks.

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PepsiCo and AB InBev are both recession-resistant stocks with wide moats and decent dividend yields. But over the past 12 months, PepsiCo's stock rallied about 30% as AB InBev's stock stayed nearly flat. Let's see why PepsiCo outperformed AB InBev, and if that trend will continue throughout the rest of the year.

How do PepsiCo and AB InBev make money?

PepsiCo splits its business into six main segments: PepsiCo Beverages North America (33% of its revenue in the first nine months of 2019), Frito Lay North America (26% of its revenue), Quaker Foods North America (4%), and three international units (37%), which sell a mix of its drinks and packaged foods.

AB InBev splits its business into five regions: South America (23% of its volume in the first nine months of 2019), Middle Americas (23%), North America (20%), Asia-Pacific (19%), EMEA (15%). The remaining sliver comes from its global export and holding companies.

Which company is growing faster?

Investors generally focus on PepsiCo and AB InBev's organic revenue growth, which excludes the impact of acquisitions, divestments, and foreign exchange rates.

Ice cubes floating in cola.

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PepsiCo's organic revenue rose 5% in the first nine months of 2019, with all six of its units reporting positive growth. Its growth was strongest in its AMENA (Asia, Middle East, and North Africa) and Latin American regions, which both generated 8% growth. Quaker Foods North America was the weakest link with just 1% growth.

PepsiCo's organic growth was mainly driven by price hikes, which offset softer shipments of carbonated drinks and packaged foods in more health-conscious markets. Despite those challenges, PepsiCo still expects its organic sales to grow by at least 4% for the full year. Analysts expect its reported revenue to rise 3% this year and 4% next year.

AB InBev's organic sales rose 5% in the first nine months of 2019. Its total shipment volumes dipped in North America and Asia, mainly due to competition from local and craft beers and spirits popular among Millennial drinkers in the U.S. and China, but it offset those declines with price hikes and the "premiumization" of multiple brands. its volume rose across its other regions, led by nearly 4% growth in the Middle Americas and EMEA regions.

AB InBev didn't provide a full-year outlook for its organic sales, but analysts expect its revenue to dip 2% this year and rise nearly 3% next year.

Profitability, valuations, and dividends

PepsiCo expects its core constant currency EPS (which lines up with its organic sales) to dip 1% this year, due to tough comparisons to asset-sale and refranchising gains in 2018, "incremental" investments in its core business, and a higher tax rate.

Wall Street expects PepsiCo's reported earnings to dip 3% this year and rise 8% next year -- which are admittedly tepid growth rates for a stock that trades at 24 times forward earnings. However, jittery investors are likely paying a premium for PepsiCo because it typically holds up well during market downturns.

AB InBev didn't offer precise earnings guidance, but analysts anticipate 30% growth this year (mainly from its listing of Budweiser APAC in Hong Kong last September and the divestments of its Australian operations), followed by flat growth next year -- which is also a low growth rate for a stock that trades at 17 times forward earnings.

PepsiCo has raised its dividend annually for nearly five decades and currently pays a forward dividend yield of 2.7%. AB InBev, which pays unpredictable semi-annual dividends, pays an estimated forward yield of 2.6%. PepsiCo and AB InBev spent 87% and 31% of their free cash flows on their dividends over the past 12 months, respectively -- so both companies still have room to boost their payouts.

The winner: PepsiCo

PepsiCo's stock is pricier than InBev's, but it owns a better diversified business, faces fewer direct headwinds, and is diversifying into new product categories like sparkling water and hybrid coffee. InBev's business remains broadly stable, but its core brands are clearly losing momentum in the U.S. and China. Therefore, investors looking for a defensive stock with a decent dividend should stick with PepsiCo instead of AB InBev.