There are lots of reasons to like PepsiCo (PEP +2.06%) as a possible investment for your long-term portfolio. One of the best reasons is its generous dividend yield -- recently at 4.1%. That yield is far above the S&P 500's recent yield of just 1.2%, and better still, it's a payout that's been growing at a good clip -- an annual average of more than 7% over the past decade.
But wait -- there's more! Its payout ratio -- the percentage of earnings paid out in dividends -- was recently quite reasonable, too, at 67%. That leaves plenty of room for further growth. (PepsiCo has upped its dividend for 53 years in a row!)
Image source: Getty Images.
Many people might imagine PepsiCo as mainly a beverage business, but they'd be wrong. It's very much a snack business, too, with brands such as Lay's, Doritos, Cheetos, and Quaker alongside Gatorade, Pepsi-Cola, Mountain Dew, and SodaStream. PepsiCo has a new pending acquisition, too, of the prebiotic soda brand Poppi.
NASDAQ: PEP
Key Data Points
PepsiCo's stock looks appealing at recent levels, with a forward-looking price-to-earnings (P/E) ratio of 16.5, well below the five-year average of 21.9. The low valuation is due to the stock having slumped in recent years, as it tries to adapt to changing tastes. It's doing so, including via the Poppi acquisition, and it's cutting costs, too.
Chairman and CEO Ramon Laguarta recently noted:
As we look ahead, we will continue to build upon the successful expansion and growth of our International business and accelerate initiatives to improve our North America business performance. These initiatives include more portfolio innovation and cost optimization activities that aim to stimulate growth and profitability. As a result, for fiscal 2025, we remain confident in our ability to deliver low-single-digit organic revenue growth...
This could be a great time to snag some shares if you're bullish on PepsiCo's long-term potential.
