No company's stock rises in a straight line; there are always zigs and zags along the way. Most investors get excited about stocks when they are rising. I get excited about stocks when they have fallen. And that's why you might want to jump aboard this growth stock right now. If you do, you'll collect a 4% dividend yield while you wait for management to get back on track, like it has done time and time again over the last 50-plus years.
Sticking to the long-term winners
There's no way for investors to get inside a company and examine all of the ins and outs of its business. The best you can do is read the financial reports, listen to the conference calls, and watch out for news. But that won't tell you everything -- you just have to trust that management is doing the right things to support long-term performance.
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That's why I focus heavily on a company's dividend history. Increasing the dividend year in and year out requires both a good business model and strong execution, regardless of the market environment. A business that isn't growing simply can't afford to continue to raise the dividend. PepsiCo (PEP 0.99%) has increased its dividend annually for 53 consecutive years, making it a Dividend King. That's an impressive record of dividend growth backed by an impressive record of business growth.
What I love about PepsiCo and what to worry about
PepsiCo's business is top-notch. First, it is a diversified consumer staples company, with offerings in the beverage, salty snack, and packaged food segments of the industry. Not only are food makers resilient businesses, since we all need to eat, but PepsiCo happens to have industry-leading brands, marketing skills, distribution, and R&D chops. It is also large enough to act as an industry consolidator, buying smaller brands to fill out its brand portfolio and keep pace with consumer trends. It can stand toe to toe with any of its peers as a business.
But even well-run companies like PepsiCo go through hard times. It's just the nature of business. The key is what the company does when it faces hardship. In the case of PepsiCo, it hunkers down and focuses on executing its well-honed playbook. PepsiCo isn't performing as well as its peers right now, and it is working on controlling costs, improving innovation, and adding new brands to its collection (such as Poppi and its probiotic beverages).
There's no easy fix, but PepsiCo isn't afraid of hard work. Wall Street, however, seems to be afraid of PepsiCo's stock, which trades down more than 20% from its 2023 highs. It is, basically, in its own bear market. And that drop has pushed the dividend yield up to a historically high 4% or so. This strong growth stock is now on sale.
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But it may not be on sale for long. Although organic revenue growth was only 2.1% in the second quarter of 2025, the company's financial results beat Wall Street's dour expectations. The stock rallied, helped in part by an update on the company's plan to improve financial performance.
That plan? Cut costs, focus on innovation, and integrate acquisitions to keep pace with consumer tastes. There are specifics that are unique to today, but that plan is the same one it has always used. And, if history is any guide, it will eventually get PepsiCo's growth back in line with the growth of its peers.
Now is the time to act with PepsiCo
Buying PepsiCo stock today means buying a well-run company while it is out of favor and getting paid very well to wait for the business to turn for the better. When that happens, as it has multiple times over the past 50-plus years, Wall Street will likely fall back in love with PepsiCo stock -- and the opportunity to buy a great growth stock at a cheap price will be over. That makes PepsiCo a no-brainer buy in my book, which is exactly why I own it.
