These are crazy times for the world. While some consumers might hesitate to buy an expensive shirt or a new car when budgets are stretched thin, no one stops eating. We all will want a cold drink and a snack at the end of the day. PepsiCo (NASDAQ:PEP) directly benefits from that reality.

Is this a good reason to invest in the company?

Strong performance through COVID-19

Pepsi CEO Ramon Laguarta's defensive business model enabled roughly flat organic company sales for the second quarter compared to the year-ago period. Generally accepted accounting principles (GAAP) sales, however, were down 3%. According to Factset, S&P 500 average sales for the same quarter declined by approximately 11%.  . Operating cash flow, astoundingly, grew by 6%.

Soda, pouring into a glass

Image source: Getty Images.

Firms ranging from Carnival to Boeing to Marriott International cut dividends; PepsiCo did not. Today, its market cap sits at $188 billion and, based on that, PepsiCo's total shareholder yield (dividends plus buybacks) is an impressive 4%. The pandemic did put somewhat more stress on that payout, but it looks fairly safe for the time being. The payout ratio jumped from 45% to 73%, which is less comfortable but still securely less than 100%.

Key catalysts for Pepsi's stock

With at least some restaurant closures in the rearview mirror and businesses slowly opening up once more, the yield looks safe. There might be hiccups in the reopenings (see California recently), but we should be gradually moving toward normal.

A decades-long project of diversifying PepsiCo's assets clearly paid off during COVID-19. While food service/bar closures hurt its beverage performance, snacks grew by 4% during the quarter. Snacking is about as demand-inelastic as a product category can be; people need food and generally like to pay lower prices for it, especially with today's economic pain.

Demand in snacking should persist for the long term. Millennials are far more likely than baby boomers to snack, and an eye-popping 25% of millennials snack three to four times a day. Younger folks think any food can be considered a snack and are most inclined to replace meals with more snacking. All of these features are ideal for Pepsi, especially within a group of consumers who have decades of consumption ahead of them.

Those consumers, however, are gradually shifting to healthier snacking: 33% of people are motivated to snack in a healthier way compared to last year. PepsiCo's sodas and sports drinks are not ideal for drawing in increasingly healthy consumers, and the company has addressed that issue. Its bottled water brand, Aquafina, is the most popular one in the world. In 2018, the company leveraged its popular Frito-Lay brand to debut Imag!ne, a line of snacks richer in nutrients compared to chips or cookies.

PepsiCo invested millions in its European "nutrition greenhouse" to provide people with the resources they need to create healthy new snacks for Pepsi to share with the world. Still, Pepsi's portfolio is predominantly made up of drinks and snacks rich in sugar, something to keep in mind.

Caring for all stakeholders

Beyond nutrition, the large-cap stock is dedicated to a healthier planet for humans and a higher ESG score for its shareholders. Its sustainable farming and sourcing programs are dedicated to making sure Pepsi's environmental footprint is as small as possible across the value chain. This, of course, often means slightly higher costs for the company. But these investments highlight a management team willing to think long-term.

Pepsi is ideal for folks who want a safe and durable stock to limit risk from covid-19. Its rock-solid demand visibility and continued payout depict a company with staying power and long-term viability. It will need to respond to shifting snacking preferences but has done so already to a certain extent. If you want stability and comfort when picking a stock, Pepsi is a solid option.