Investing in high-quality dividend stocks can be a great way to generate a reliable stream of passive income. Few companies have proven the durability of their dividends over the decades more than Dividend Kings. These companies have increased their dividend payments for at least 50 years in a row.
Global beverage and snacking giant PepsiCo (PEP 0.80%) recently extended its dividend growth streak to 54 consecutive years, maintaining its place in the elite group of Dividend Kings. With its yield now approaching 3.5%, nearly triple the S&P 500's level of 1.2%, PepsiCo can help satisfy your desire for a bankable passive income stream.
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A high-quality, high-yielding payout
PepsiCo recently announced its next two quarterly dividend payments. The company's March payment will be the same rate as last quarter, though it's up 5% from the prior year's level. Meanwhile, it's increasing the June payment by 4% compared to the current level. That marks the company's 54th consecutive annual dividend increase. PepsiCo has paid quarterly dividends since 1965.
The company can comfortably afford its higher dividend level. Last year, PepsiCo generated nearly $12.1 billion in operating cash flow, which covered its capital spending ($4.4 billion) and dividend payments ($7.6 billion). The company also repurchased $1 billion of its stock last year. It ended the year with about $9.5 billion in cash on its balance sheet, which supports its strong A+ credit rating.
NASDAQ: PEP
Key Data Points
PepsiCo expects to return even more cash to investors in 2026. It anticipates paying $7.9 billion in dividends following its recent dividend increase. The company also plans to repurchase $1 billion of its stock, part of its newly announced $10 billion repurchase program through early 2030.
Continued growth
PepsiCo expects to continue growing its revenue and earnings to support its rising dividend. In 2026, the company expects net revenue growth of 4% to 6% (and organic revenue growth of 2% to 4%). That should support core earnings-per-share growth of 4% to 6% on a constant-current basis.
The company continues to see a long growth runway ahead. Its long-term target is to deliver 4% to 6% annual organic revenue growth and high single-digit earnings-per-share growth on a constant currency basis. PepsiCo is investing heavily -- nearly 5% of its net revenue in 2026 -- to support its continued growth, with a focus on investing in high-growth areas.
The company also uses its strong balance sheet to accelerate growth by making acquisitions and strategic investments. Last year, PepsiCo bought Poppi for $1.7 billion. It also strengthened its long-term strategic partnership with Celsius, including increasing its stake in the company to 11% through the acquisition of $585 million of newly issued convertible 5% preferred stock.
A satisfying income stock
PepsiCo has a long history of satisfying investors' appetite for more income. The global beverage and snacking giant is raising its payment for the 54th consecutive year, further increasing its already high-yielding payout. With a strong financial foundation and more growth ahead, PepsiCo is an ideal stock to buy and hold for a durable, growing stream of passive dividend income.
