With consumer sentiment down 8% from March to April due to rising concerns about inflation, investors are now looking for safe and resilient stocks to own. Consumers are worried about the impact of tariffs, and inflation concerns are high. But there are a few companies that are standing strong and could tackle the situation better than the others.
PepsiCo, Inc. (NASDAQ: PEP | PEP Price Prediction) and Coca Cola (NYSE: KO) are two beverage giants with a global presence. They have always been rivals and battled for higher market share. While the competition has only grown in the past few years, they have become household names and the top choice for several investors. Both these companies pay dividends and we’re here to choose the one company that deserves your hard-earned money.
Coca-Cola
Incorporated in 1886, Coca-Cola started as a beverage company but has expanded its portfolio over the years. The company now sells products like juices, tea, coffee, and water. It has grown its global presence, market share, and revenue in the past decades.
Exchanging hands for $71, KO stock is up 16% year-to-date and 57% in five years. The stock is moving closer to the 52-week high of $74 which is noteworthy in a period where most stocks are dropping in value. It is a dividend aristocrat and has increased dividends for 63 years. The stock enjoys a yield of 2.84% and the dividend payout is considered highly stable.
Coca-Cola’s numbers are also impressive. In the fourth-quarter results, the company saw a revenue of $11.5 billion and a 19% jump in the operating income. It saw a 6% year-over-year jump in net revenue and a 14% jump in organic revenue. Its EPS was up 12% to $.0.51. Coca-Cola expects to deliver 5% to 6% organic revenue growth in 2025.
The company has achieved this increase despite a volatile environment where consumers are worried and reluctant to spend money on nonessentials. This speaks a lot about its products and financial strength. The company is set to announce first-quarter results on April 29.
PepsiCo
Coca-Cola’s biggest rival, PepsiCo has become more than a beverage company. It has expanded its product portfolio and offers snack items like potato chips, granola bars, and cereal. The company owns brands like Quaker, Cheetos, and Doritos. This expansion has helped PepsiCo maintain its solid market position. However, inflation and low consumer spending haven’t spared the company.
Its recently announced first-quarter results saw a 1.8% drop in net revenue at $17.92 billion and a 10% drop in the EPS which came in at $1.33. The organic revenue was up 1.2% year-over-year. The management raised product prices which has helped with the revenue but the sales volume has remained sluggish.
For 2025, it is aiming for a low-single-digit rise in organic revenue. The management is wary of the impact of tariffs and will have to look for ways to increase sales organically. Price hikes will not help the company in the long term.
PEP stock is exchanging hands for $133 and is down 11.20% year-to-date. The stock has lost 24% value in 12 months and 20% in 6 months. Its 5-year return is also negative. The stock has a dividend yield of 4.06% and the company has increased dividends for 53 years.
The verdict
While Coca-Cola and Pepsico are both solid companies with a global presence, they will undoubtedly feel the impact of tariffs and this could affect the revenue numbers in the coming quarters. Both companies have raised dividends for more than 50 years and they will continue to reward shareholders in the years to come. Coca-Cola stock is cheaper than PepsiCo but it has a lower dividend yield. Coca-Cola is yet to announce first-quarter results but the stock movement makes me want to assume that the numbers will be better than Pepsi’s.
Investors need to have a long-term perspective when choosing dividend stocks and I believe Coca-Cola is a better dividend player than PepsiCo. It has a better outlook, and if the company maintains the ongoing momentum, it could see a higher upside. Considering the numbers and the stock price, I’d pick Coca-Cola over PepsiCo.
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