Dividend Kings are an elite group of companies that have paid and raised their dividends for at least 50 consecutive years. Notable members include Coca-Cola, Procter & Gamble, and Johnson & Johnson -- companies known for their slow and steady growth rather than market-beating returns.

Walmart (WMT +2.10%) has been a standout among Dividend Kings -- with a 60.3% year-to-date (YTD) return. Meanwhile, PepsiCo (PEP +0.85%) is having a terrible year, falling 6.6% YTD to around a three-year low. Here's why both blue chip stocks could be worth buying now, but for entirely different reasons.

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Walmart is a rare retail winner

Walmart's 2024 performance is even more outstanding when you consider how some of its peers are doing. Discount retailers like Dollar General and Dollar Tree are hovering around five-year lows. Target has recovered some of its margins but isn't capturing growth and generating record-high sales and profits like Walmart.

Walmart has done a masterful job conveying value to customers at different price points. The company continues to attract customers looking for staples like household goods and groceries. Consumers have generally pulled back on discretionary spending, but that may mean buying furniture at Walmart instead of Target or Crate & Barrel.

Long-term investments in internal processes, store renovations, and customer experience improvements are paying off. Walmart's home delivery service, Walmart+, gives consumers value and convenience.

Walmart is guiding for full-year fiscal 2025 consolidated net sales growth of 3.75% to 4.75% and consolidated adjusted operating income growth of 6.5% to 8%. All told, Walmart is at the top of its game during a time when so many other retailers are struggling to counteract decreases in demand.

Pepsi's sell-off has gone too far

Pepsi's growth has ground to a halt. Years of price increases have finally caught up to the food and beverage behemoth and have contributed to declining volumes across Pepsi's beverage business and Pepsi-owned Frito-Lay and Quaker Oats.

Anytime a company faces resistance to price increases, it means that consumers don't see value beyond what is already being charged. Pepsi is changing its strategy to drum up demand through promotions and increasing the quantity of products in certain packages. The strategy could lead to higher sales volume but also impact margins in the near term.

Pepsi stock declined 4% on Nov. 15 and is now less than 1% away from a 52-week low. In addition to weak earnings and slowing growth, Pepsi could be challenged by a strong U.S. dollar and the impact of policies imposed by the Trump administration.

The ICE U.S. Dollar Index is a benchmark that tracks the dollar's strength compared to a basket of foreign currencies. The index came close to a 52-week low in late September and then pole-vaulted to a 52-week high last week. Tariffs and the onshoring of U.S. manufacturing could lead to inflation and an even stronger dollar.

A strong dollar can impact companies that convert sales made outside the U.S. from foreign currencies into dollars.

For the nine months ended Sept. 7, 2024, Pepsi generated 61% of sales in North America and 67.8% of operating income. Pepsi isn't as globally focused as Coke, where North America comprised 39.3% of consolidated revenue for the nine months ended Sept. 27, 2024, but it is more global than Walmart.

In fiscal 2024, which ended Jan. 31, 2024, Walmart's international segment made up just 17.8% of revenue and 16.8% of operating income.

The real figure is a bit higher than that because some Sam's Club stores are outside the U.S., but Sam's Club is reported as a separate segment. Still, Walmart makes the vast majority of its earnings in U.S. dollars. It isn't immune from tariffs, which would impact its costs and supply chain. However, it doesn't face the currency risks of a company like Pepsi.

Value versus momentum

Walmart is executing much better than Pepsi right now, and there's reason to believe it can continue doing well, whereas the timeline of Pepsi's recovery is uncertain. However, Pepsi is a far less expensive stock than Walmart, and it has a higher yield.

As you can see in the following chart, Pepsi sports a price-to-earnings (P/E) ratio and a forward P/E ratio below its historical average. In contrast, Walmart's P/E and forward P/E are both above its historical average.

PEP PE Ratio data by YCharts

The valuation discrepancy indicates that investors are relatively pessimistic about Pepsi and optimistic about Walmart, which makes sense, given how both companies have been performing.

Similarly, Pepsi's dividend yield is significantly above the average over the last decade, whereas Walmart's yield has plummeted below 1%.

PEP Dividend Yield data by YCharts

Pepsi's yield is elevated because it has continued to increase its payout despite a languishing stock price, whereas Walmart's stock price has gained far more than its dividend growth rate, which has compressed its yield. Walmart may be a Dividend King, but it is no longer a viable source of passive income, whereas Pepsi is an excellent source of passive income -- especially compared to the S&P 500, which yields just 1.3%.

Two industry-leading companies worth investing in

Walmart is worth buying for investors looking for a company that can continue doing well even if the dollar strengthens and consumer demand weakens. However, Pepsi may be the better buy for value investors looking for a sizable dividend. If Walmart's results disappoint, it could suffer a significant sell-off, given its expensive valuation is based on sustained growth. In contrast, the sentiment for Pepsi is already bearish, so investors could already be expecting weak results.

The better buy comes down to your risk tolerance, preference for growth versus value, and investment objectives -- which could include a pure focus on long-term gains or a mix of long-term gains and passive income. For balanced investors, both stocks could be worth buying now. Investing in a 50/50 split of Walmart and Pepsi produces a yield of 2.1% -- which is still above the S&P 500 average while giving you a mix of quality and value.