Few companies are as proven and durable as food and beverage giant PepsiCo (NASDAQ: PEP). The company has performed for decades, showering investors with dividends and building wealth over generations. The stock has steadily faded in recent weeks and is approaching 52-week lows.
Years of inflation have consumers grappling with higher grocery prices, and sentiment is dropping. Investors have already seen companies like McDonald’s cite weaker consumer spending as a headwind to their business.
So, should investors stay away, or is now the time to buy the stock?
Here are four reasons long-term investors should buy the stock like there’s no tomorrow.
1. Best-in-class brands
PepsiCo’s world-class food and beverage brands have been its pillar of strength, creating decades of growth and wealth for its shareholders. The stock price has appreciated more than 10,000% over its lifetime, and the dividend has grown over 5,300%. PepsiCo’s brands include beverage headliners like Pepsi, Mountain Dew, Gatorade, and Lipton, while its food products include names like Doritos, Cheetos, Lay’s, Quaker, and many more.
PEP Revenue (TTM) Chart
Dominating the grocery aisle means that PepsiCo products get top-tier shelf space in supermarkets and pricing power because consumers generally will buy what they know and love. Additionally, food and beverage products are small ticket items; PepsiCo can get away with bumping the price a few cents because it doesn’t dramatically impact consumers’ budgets. Decades of population growth and price increases have steadily driven revenue to over $91 billion annually.
2. Still an excellent dividend grower
PepsiCo is a dividend dynamo because it offers yield and growth. Investors buying today get a solid starting yield of 3.3%. On top of that, PepsiCo has raised its dividend by an average of 6.6% for the past five years. Its most recent 7.1% increase shows that management is confident in the company’s outlook. Remember, PepsiCo has raised its dividend for 52 consecutive years (a Dividend King), so to maintain inflation-beating dividend growth after all this time…
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