Investing in the stock market is a fantastic way to build long-term wealth. While the broader S&P 500 has returned close to 10% annually over time, there are certain individual stocks that provide even more benefit to shareholders in the form of steady and growing dividends. 

In addition to the potential for stock price appreciation, Coca-Cola (KO 0.17%)PepsiCo (PEP -0.30%), and Starbucks (SBUX 1.08%) are three popular food and beverage stocks that dividend fans should seriously consider. 

Happy person holding cash.

Image source: Getty Images.

A payout with some real fizz

Eric Volkman (Coca-Cola): I'm going with one of the classic, top-of-the list beverage dividend stocks out there. Let's crack open a can of Coca-Cola and drink some of what its maker is offering.

Firstly, Coke the company is one of the most steady and reliable dividend payers you'll find anywhere in the sector. It's not only been handing out one every quarter for decades, it's been raising it constantly.

At this point it's not only a Dividend Aristocrat (a company that has lifted its payout at least once annually for a minimum of 25 years in a row), but the stock has reached the exalted status of Dividend King. That's a company that has achieved the feat for 50 years; Coke's streak stands at a mighty 59.

That clock will surely keep ticking. The company weathered the pandemic very well, with 2020 revenue and non-GAAP (adjusted) per-share earnings both dropping at single-digit rates compared to 2019. In ordinary times that would be nothing to brag about, but in this challenging era it shows great resiliency considering the drops most other consumer-facing companies experienced that year.

It's also impressive considering that the anchor products Coke is famous for, sugary beverages, have fallen out of favor in recent years because of increasing consumer health consciousness. But the company is a relentless and very effective marketer, which keeps its namesake drink (plus its many derivatives like Diet Coke) the unhealthy quaff of choice for many people around the world, regardless of the wider trend. 

As a result, even in the pandemic year of 2020, sales in the still-crucial sparkling soft drinks category only fell by 4%. That was the narrowest decline out of Coke's four beverage segments (which also include juice, dairy and plant based drinks, in addition to water, enhanced water, and sports drinks, and finally tea and coffee).

Producing drinks isn't really an expensive endeavor, and the company has always been good at managing costs -- even with that ever-giant marketing budget. So it continues to be a real cash-generating beast.

On an annual basis, net operating cash flow hasn't dipped below $6.4 billion in the last five years, and its free cash flow hit a half-decade peak in 2020 at nearly $8.7 billion. The latter was sufficient to cover the dividend payment and have more than $1 billion in spare cash left over for other purposes.

Thanks to a recent pullback in share price (largely over fears of the coronavirus delta variant affecting the key away-from-home sales segment, in my opinion), Coke's dividend yield has risen lately. It currently stands at just over 3%, a higher rate than many peer blue chip stocks.

So this is a powerful dividend stock that can give you quite the financial sugar rush. Drink deep!

A perfect food and beverage pairing

Jeremy Bowman (PepsiCo): PepsiCo is much more than its namesake beverage brand. The company owns Frito-Lay, Quaker Foods, Tropicana, Mountain Dew, and Gatorade. That diversity makes it more balanced than pure-play beverage stocks like Coca-Cola, and has also helped Pepsi better manage an environment where demand for sugary drinks is declining.

Pepsi's brand strength goes without saying. It was ranked the 26th most valuable brand in the world by Interbrand, and its marketing prowess and global distribution network give it a competitive advantage and help create barriers to entry in its industry.

The company's recent results have been boosted by lapping the impact of the lockdown, which weighed on its restaurant-supply business and away-from-home consumption. In its second quarter, its most recent one, Pepsi's revenue jumped 20.5% and was up 16.7% against 2019 results, showing performance is up substantially from pre-pandemic levels.

Core earnings per share of $1.72 was up from $1.32 in the year-ago quarter and $1.48 in Q2 2019. The company's investments under its Faster, Stronger and Better framework, which guides investments in its brands, supply chain, and manufacturing capacity, are paying off. Every segment except Quaker, which surged during the lockdown period, saw strong growth, showing the company recovering well from the global health crisis.

For the dividend investor, Pepsi has a lot to offer. It's a Dividend Aristocrat, having raised its dividend every year for 48 consecutive years, and that shows that investors can rely on the company for income and to grow its business. Today, the stock offers a dividend yield of 2.8%. With the company targeting 11% growth in core earnings per share, investors should expect another dividend hike coming soon. 

Venti with an extra shot of dividends

Neil Patel (Starbucks): Often times, companies that pay a solid dividend sacrifice investing in growth opportunities. This, however, is definitely not the case with Starbucks. The coffeehouse juggernaut has continued to expand while rewarding its shareholders with growing cash distributions. 

Starbucks first announced a dividend in the second quarter of fiscal 2010. The initial amount was a split-adjusted $0.05 per share. Fast-forward to today, and management just paid shareholders a quarterly dividend of $0.45 per share. That's a remarkable nine-fold increase for investors in 11 years. 

During that time, Starbucks was still in major expansion mode, opening large numbers of stores year in and year out. As of June 27, the company had 33,295 locations worldwide, a number leadership believes can reach 55,000 by 2030. And sales continue to climb following the pandemic's disruption in 2020, increasing 78% year over year and reaching a record $7.5 billion in Q3. 

Starbucks has been able to thrive in part due to its excellent rewards program and mobile app. The company's 24 million active members provide extremely valuable data to the business, which Starbucks can use to improve the menu and ordering experience even more. The app can also drive engagement with its most loyal customers by offering up suggestions based on order history. 

Management is very optimistic about the company's prospects. For full-year fiscal 2021, it expects Starbucks' global same-store sales to soar 20% to 21%, an increase from prior guidance. Furthermore, earnings per share (EPS) guidance was pushed up meaningfully and is forecast to reach $3 per share (at the midpoint) for the fiscal year. This would be a major improvement from fiscal 2020's EPS of $0.79. 

"Starbucks delivered record performance in the third quarter, demonstrating powerful momentum beyond recovery. Our ability to move with speed and agility and to be out in front of shifting customer behaviors has helped further differentiate Starbucks, positioning us well for this moment," CEO Kevin Johnson said when describing the quarter.  

With this level of elevated performance, expect Starbucks to keep satisfying dividend fans for a long time.