The Nasdaq 100 market index is home to many market darlings. The entire roster of "Magnificent 7" stocks is found here, setting the tone for Wall Street as a whole. It's also a volatile group, with 1-year returns ranging from a 50% price drop to a 466% gain.
But wait -- there's more!
The Nasdaq 100 also holds plenty of stable household names and generous dividend payers. On June 9, 2025, the two richest dividend yields on this index come from food giants Kraft Heinz (KHC +1.35%) and PepsiCo (PEP 1.07%). Should you buy these familiar stocks today? Let's have a look.
NASDAQ: KHC
Key Data Points
Kraft Heinz: 6.1% dividend yield
Kraft Heinz used to be a classic dividend-raising income stock. Food manufacturer Kraft merged with condiments titan Heinz in 2015, creating one of the world's largest consumer goods companies. The new company started off with a strong dividend plan.
The payouts increased in each of the first three years -- and then Kraft Heinz slashed its dividend budget to the bone. Some of its splashy food brand buyouts turned out to be less profitable than expected, forcing the company to conserve cash with a stricter dividend policy.
The quarterly dividend checks have been stuck at the resulting level of $0.40 per share since the start of 2019. The dividend yield briefly spiked to more than 8% before backing down to the 4% range.
Image source: Getty Images.
And now Kraft Heinz's yield is soaring again, despite a stable payout. The stock price has fallen 25% in the last two years, even though the underlying business has shown robust results. Trailing sales are down by a modest 5.6% over the same period, while free cash flows -- the lifeblood of those dividend checks -- more than doubled.
The stock is arguably cheap for good reason, anyhow. Inflation fears have limited Kraft Heinz's pricing power in recent years while many store chains have developed fresh competition in the form of high-quality store brands. But the share price cuts look much too steep.
Kraft Heinz shares are trading at 12 times trailing earnings and 10 times free cash flows -- ratios usually reserved for troubled businesses on the brink of bankruptcy. With stable sales and surging cash profits, Kraft Heinz isn't going out of business anytime soon. This stock could be a great buy today, locking in a strong dividend yield for the long haul.
NASDAQ: PEP
Key Data Points
PepsiCo: 4.2% dividend yield
Beverage and snacks titan PepsiCo is a card-carrying Dividend King. The streak of annual payout boosts started in 1972. That's a 53-year streak of uninterrupted increases.
That streak alone would be a reliable yield-raising quality, but there's more to PepsiCo's record-high yields. The stock is also down 28% in two years. Larger checks divided by lower share prices? That's a double-sided formula for dividend yield increases.
PEP Dividend Yield data by YCharts
Like Kraft Heinz, PepsiCo has seen flattish sales growth in recent years. However, that's a distinct slowdown from tremendous growth in the 2020 to 2023 period. So PepsiCo investors lost some of their motivation to keep the valuation multiples high. The stock traded at an average price-to-earnings ratio of 36 in the hot three-year span, while price to free cash flow hovered around the 28x mark. By now, the two valuation metrics have cooled down to 25 and 19, respectively.
The soda veteran isn't sitting on its hands, either. PepsiCo is developing high-protein drinks in an effort to meet rising consumer demand for healthy foods. It's also participating in the growing category of energy drinks via a tight distribution partnership with Celsius Holdings (CELH 5.75%), and classic American snacks like Cheetos and Doritos are enjoying rapid growth in markets such as Europe and Latin America.
PepsiCo's stock isn't quite the bargain I saw in Kraft Heinz, but it's still a tempting stock pick right now. The commitment to larger and larger dividend checks is not going away, and the stalled top-line growth should be a temporary situation. So it's a modestly priced stock with a great dividend yield -- a perfect package for many risk-averse income investors.
