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Yahoo
2 days ago
- Business
- Yahoo
3 Reasons Why Coca-Cola Is Still a Top Dividend Stock for Generating Passive Income
Key Points Coke continues to generate organic growth despite a highly challenging operating environment. The company is adapting to changing consumer preferences and regulatory pressure by offering Coke made with U.S. cane sugar instead of corn syrup. Coke has a growing and affordable dividend with a competitive yield. 10 stocks we like better than Coca-Cola › Some top stocks are known for their growth potential, while others are recognized for their predictability. Coca-Cola (NYSE: KO) is in that second camp. The company isn't perfect, and its results have been disappointing in some periods. But through it all, one constant that investors have been able to count on is Coke's rock-solid dividend. Coke is unique because it has a high yield at 3% and it has an extensive track record of increasing its payout. It has done so for 63 consecutive years, earning it a spot on the list of Dividend Kings. Here's why Coke remains a great buy for investors looking to boost their passive income. 1. Delivering solid results Coke reported a good second quarter on July 22. The company grew organic revenue by 5%, comparable earnings per share (EPS) by 4%, and comparable operating margins rose to 34.7% versus 32.8% for the second quarter of 2024. For the full year, Coke expects organic revenue growth of 5% to 6%, comparable currency-neutral EPS of 8%, and comparable EPS of $2.88. So currency headwinds are really throwing a wrench in Coke's results and detracting from the strength of the underlying business. Coke's resilient results didn't get a big reaction from Wall Street, but that may be because Coke is up around 11% on the year, which is slightly better than the gain for the S&P 500 (SNPINDEX: ^GSPC). Coke has been a standout in what has otherwise been a challenging consumer staples sector -- especially for packaged food and beverage and snack companies. Many food and beverage stocks are at multiyear, if not multidecade, lows. Inflation and relatively high interest rates have been hitting consumer demand hard for everyday household goods. When the cost of these goods go up, it affects all consumers, but especially those with less discretionary income. Another challenge is changes in consumer preferences. Some consumers are shifting their buying behavior toward healthier options, characterized by lower sugar content, better ingredients, and improved nutrition. These trends were reflected in Coke's latest results, which highlighted volume growth in Coca-Cola Zero Sugar, Diet Coke, Fanta, Fairlife, BodyArmor, and Powerade. For years now, Coke has been seeing excellent growth in zero sugar and diet versions of its flagship Coca-Cola products -- a sign that investment in these labels is paying off. 2. Adapting to the times The Trump administration's Make America Healthy Again Commission is pressuring food and beverage companies to phase out petroleum-based synthetic dyes and replace artificial ingredients with natural ingredients. On its latest earnings call, Coke said that it plans to expand its Trademark Coca-Cola product range to include U.S. cane sugar this fall. In the U.S., Coke uses high-fructose corn syrup as its primary sweetener because it is cost-effective. But Coke made in Mexico typically uses cane sugar, which is why some consumers tend to go out of their way to buy this product version. The decision to make Coke with cane sugar in the U.S. may have garnered a negative reaction if announced years ago, but the time is right to make this change. Coke's standout brands in recent years have generally been the healthier options in its portfolio. It has had resounding success growing Topo Chico since it acquired the brand in 2017. Similarly, its dairy brand Fairlife (acquired in 2020) has been a value add for the company. Not only are these brands doing well, but they also diversify Coke away from a majority soda lineup toward other options, which makes the company better positioned to unlock earnings growth from a diversified revenue stream. 3. A growing and affordable dividend Money isn't created out of thin air. For a company to consistently grow its dividend and thus incur a larger dividend expense, it must grow its earnings. Coke's earnings growth hasn't been great in recent years, but that's mostly because it has been making significant changes to its brand lineup and addressing the aforementioned challenges. However, the growth has been sufficient for Coke to continue increasing its dividend. Coca-Cola pays a $0.51 per share quarterly dividend, or $2.04 per year. If Coke hits its adjusted EPS guidance of 3%, earnings will be $2.97 in 2025 -- meaning that Coke can afford to grow its dividend without impacting its financial health or taking away cash that could otherwise be reinvested in the business. Coke also has a reasonable valuation. Based on the share price of $69.17 at the time of this writing and $2.97 in 2025 earnings, Coke would have a price-to-earnings ratio of 23.3. It's not a bargain-bin price for a low-growth dividend stock. And there are plenty of better deals available for investors seeking a superior value. However, Coke arguably deserves this valuation because the dividend is so reliable, and the company continues to generate organic growth and pricing power at a time when many of its peers are struggling. A potential centerpiece of a passive income portfolio Coke's brand lineup, high-margin business, and willingness to adapt to changes in consumer preferences make the company a worthy foundational holding for income investors. The shift from corn syrup to cane sugar in the U.S. may lead to higher costs in the near term, but the move could pay off if it increases sales volumes. Coke continues to demonstrate why it is the industry leader across numerous non-alcoholic beverage categories, and why the stock remains a plug-and-play option for income investors to add to their portfolios. Do the experts think Coca-Cola is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Coca-Cola make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,041% vs. just 183% for the S&P — that is beating the market by 858.71%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 28, 2025 Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 3 Reasons Why Coca-Cola Is Still a Top Dividend Stock for Generating Passive Income was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Thirsty for Dividend Income? 2 Beverage Companies That Qualify as Dividend Kings
Key Points Coca-Cola and PepsiCo both raised their dividends annually for more than 50 years. Coca-Cola pays a lower dividend and trades at a higher multiple. PepsiCo looks cheaper and pays a higher yield, but it faces more headwinds. 10 stocks we like better than Coca-Cola › Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP), two of the world's largest beverage companies, are resilient long-term income investments. Over the past 30 years, Coca-Cola's stock rose 324% as PepsiCo's stock rallied 551%. If we include reinvested dividends, Coca-Cola and PepsiCo generated total returns of 796% and 1,220%, respectively. Coca-Cola and PepsiCo are both Dividend Kings that have raised their payouts annually for at least 50 consecutive years. They're also the only two beverage makers in that elite club. Coca-Cola, which pays a forward yield of 2.95%, has raised its payout annually for 63 years. PepsiCo, which pays a forward yield of 3.91%, has increased its payments for 52 straight years. Those consistent dividend hikes reflect their ability to grow their earnings through economic downturns. Coca-Cola and PepsiCo are still good stocks to buy, hold, and forget. But let's take a closer look and see which beverage-making Dividend King has more upside potential. The differences between Coca-Cola and PepsiCo Coca-Cola and PepsiCo both sell a broad range of beverages beyond their flagship brands. To offset slower soda consumption rates, both companies expanded their portfolios with healthier and non-carbonated drinks. They also refreshed their flagship sodas with new flavors, smaller serving sizes, and sugar-free versions. Both companies only produce concentrates and syrups, then rely on their bottling partners to produce and distribute the finished drinks. That capital-light approach keeps their costs under control and helps them generate stable cash flows and profits. However, PepsiCo also sells packaged foods through its Frito-Lay, Quaker Foods, and Pioneer Foods divisions. Coca-Cola doesn't sell any packaged foods. That difference exposes PepsiCo to more inflationary headwinds than Coca-Cola, since it needs to deal with a broader mix of commodities that aren't used in its beverages. PepsiCo's Quaker Foods also dealt with several major recalls related to salmonella outbreaks over the past two years. Coca-Cola hasn't dealt with as many major recalls as PepsiCo. Which company has been growing faster? Coca-Cola's organic sales rose 16% in 2022, 12% in 2023, and 12% in 2024, even as the global economy was rattled by inflation, rising rates, and other macro headwinds. For 2025, it expects its organic sales to grow 5% to 6% as its comparable earnings per share (EPS) rises 8% in constant currency terms. PepsiCo's organic sales increased 14% in 2022, 10% in 2023, and 2% in 2024. That slowdown was caused by Quaker Foods' recalls, sluggish spending in China and Latin America, and the diminishing returns of its "shrinkflation" strategy of shrinking its packages while raising its prices. For 2025, PepsiCo expects a "low single-digit" increase in its organic sales as its core comparable EPS stays flat on a constant currency basis. So for now, it will likely face more near-term headwinds than Coca-Cola as it tries to stabilize Quaker Foods and improve its pricing power. From 2024 to 2027, analysts expect Coca-Cola's revenue and EPS to grow at a compound annual growth rate (CAGR) of 5% and 11%, respectively. They expect PepsiCo's revenue and EPS to increase at a slower CAGR of 3% and 8%, respectively. Coca-Cola still looks reasonably valued at 22 times next year's earnings, but PepsiCo looks cheaper with a forward multiple of 18. Which dividend looks more sustainable? Coca-Cola has a trailing payout ratio of 71%, which means it spent that percentage of its earnings per share on its dividends over the past 12 months. PepsiCo had a much higher payout ratio of nearly 100%, which gives it less room for future dividend hikes. That said, both companies should continue to raise their dividends annually for the foreseeable future to appease their income investors and keep their Dividend King crowns. Which Dividend King is a better buy today? PepsiCo generated bigger gains than Coca-Cola over the past three decades, but past performance isn't a reliable indicator of future gains. A lot of PepsiCo's previous returns were driven by its packaged foods business, but that growth engine could sputter out over the next few years if it struggles with more recalls, high commodity costs, and competitive threats. So while Coca-Cola trades at a higher multiple and pays a lower dividend, I think it's a better overall investment than PepsiCo right now. Its capital-light model, stronger growth rates, and lack of exposure to the saturated packaged foods market should impress more investors. Should you invest $1,000 in Coca-Cola right now? Before you buy stock in Coca-Cola, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 28, 2025 Leo Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Thirsty for Dividend Income? 2 Beverage Companies That Qualify as Dividend Kings was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
PepsiCo Stock Just Had Its Best Day in Over 5 Years. Is The Dividend King a No-Brainer Buy Now?
Key Points Pepsi stock soared last week in response to better-than-expected earnings and guidance. The company has been severely impacted by rising cost inflation and a decline in consumer spending. The stock remains a great value and has a high yield. 10 stocks we like better than PepsiCo › On July 17, PepsiCo (NASDAQ: PEP) stock had its best single session in over five years -- gaining 7.5% after the company reported second-quarter 2025 earnings. It was a sigh of relief for long-term investors who have endured an extended period of underperformance. Even after the rally, Pepsi is still down year to date, and the stock is up a little over 6% in the last five years compared to a whopping 95% return in the S&P 500 (SNPINDEX: ^GSPC). However, those gains don't factor in Pepsi's sizable dividend, which yields 4%. Pepsi has raised its payout for 53 consecutive years, earning it a coveted spot on the list of companies that have raised their dividends for at least 50 years -- known as Dividend Kings. Here are some key takeaways from Pepsi's latest earnings, highlighting why the dividend stock remains a compelling buy for investors seeking to boost their passive income. The worst may be over for Pepsi When Pepsi reported its first-quarter 2025 results in April, the beverage and snack giant slashed its full-year guidance due to revenue and earnings declines. The company cited inflation pressures, consumer demand challenges, geopolitical uncertainties, and tariff headaches. A lot was going wrong for Pepsi, but its latest quarter showed that the company is heading in the right direction. In the second quarter, Pepsi benefited from a weaker U.S. dollar, which improved its foreign exchange. A weaker dollar means that revenue generated in foreign currency goes further when Pepsi reports those results in dollars. Pepsi also saw volume declines level off, with convenient foods volumes down 2% and flat beverage volumes. In addition to its flagship Pepsi brand, the company owns beverage brands like Mountain Dew, Gatorade, Tropicana, and Aquafina. It also owns snack giant Frito-Lay (Lay's, Cheetos, Doritos, Fritos, etc.) and Quaker Oats. Pepsi has been acquiring a variety of snack brands to diversify its lineup and appeal to health-conscious consumers. All told, the favorable foreign exchange, paired with decent performance throughout the business, gave Pepsi the confidence to confirm its full-year guidance for low-single-digit organic growth and flat earnings. It's not great, but it's a step in the right direction for a company that had been experiencing negative growth. Pepsi is revamping its product lineup Pepsi is doing a good job of focusing on what it can control by investing in top brands through marketing efforts and adjusting packaging sizes to give customers more options at a lower cost. On its second-quarter earnings call, Pepsi discussed international cost-cutting efforts, such as closing two plants to better align production with demand, reducing fixed costs, investing in its enterprise resource planning system, managing travel and expenses, revisiting third-party contracts, and boosting productivity. Another big change for Pepsi is shifting its beverage and snack lineup to align with measures by the U.S. Department of Health and Human Services and U.S. Food and Drug Administration to phase out synthetic dyes. Reports indicate that Coca-Cola has agreed to use cane sugar instead of high-fructose corn syrup. So there's an industrywide effort to overhaul supply chains to include better ingredients. Pepsi's recent acquisitions, such as Siete Foods, play into the push toward healthier snacks. Pepsi-owned SunChips use multigrain. And PopCorners are baked instead of fried. The company already has some brands that are aligned with the current administration's initiative. But its blockbuster snack brands are not. That's about to change with the relaunch of Frito-Lay's Simply lineup, which removes artificial ingredients. Pepsi is relaunching Lay's and Tostitos under the Simply lineup in the fourth quarter or first quarter of next year and exploring the relaunch of Doritos, Cheetos, and Ruffles. The move showcases Pepsi's commitment to investing in its top brands and willingness to clean up its lineup to adhere to changes in consumer preferences and regulatory pressures. Pepsi is noticeably discounted from its historical valuation Pepsi can't control the business cycle or trade policy, but it is taking steps to lower costs and make investments that should help the company in the long run. In the meantime, the stock sports a juicy 4% yield and the valuation is incredibly cheap. As mentioned, Pepsi's full-year guidance calls for flat earnings per share (EPS) growth. Last year, it earned $8.16 in core EPS. Based on its stock price as of market close on July 18 of $143.24 per share, Pepsi would have a price-to-earnings ratio of 17.6 if it hits its full-year goal. That's dirt cheap for what has historically been a premium-priced Dividend King. Over the last decade, Pepsi has a median P/E of 26.2 -- so the stock tends to command a relatively expensive valuation. To be fair, Pepsi isn't at the top of its game like it was a few years ago, so it deserves to trade at a discount. But not as steep as what we are seeing in today's market. A passive income powerhouse to buy now Pepsi's second quarter was a reminder of the importance of investor sentiment and narratives in driving stock prices. Pepsi's latest results were mediocre at best, but the stock was so beaten down that OK was more than good enough. A stock's price can get separated from fundamentals (to the upside and the downside) due to changes in sentiment. With the dust settled, I'd argue that Pepsi is still undervalued given its portfolio of top brands across food and beverage categories. Some investors may prefer to wait to buy Pepsi until the company shows more convincing evidence of a return to growth. But in the meantime, the valuation is dirt cheap and the yield is high. Value investors looking for passive income may want to scoop up shares of the Dividend King and get paid to wait for the company to overcome its challenges. Should you buy stock in PepsiCo right now? Before you buy stock in PepsiCo, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and PepsiCo wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,477!* Now, it's worth noting Stock Advisor's total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Daniel Foelber has positions in PepsiCo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. PepsiCo Stock Just Had Its Best Day in Over 5 Years. Is The Dividend King a No-Brainer Buy Now? was originally published by The Motley Fool
Yahoo
19-07-2025
- Business
- Yahoo
Johnson & Johnson's (JNJ) Dividend Track Record: Reliability in Uncertain Times
Johnson & Johnson (NYSE:JNJ) is included among the 14 Best Pharma Dividend Stocks to Buy in 2025. A smiling baby with an array of baby care products in the foreground. Johnson & Johnson (NYSE:JNJ) has long been considered one of the most dependable dividend stocks, having increased its payouts for 63 consecutive years, including a 4.8% raise earlier this year. This consistency earns it a place among the elite Dividend Kings, a group of companies with more than 50 straight years of dividend growth. Johnson & Johnson (NYSE:JNJ)'s second-quarter results once again underscored the strength behind its dividend. During the first half of the year, the company generated roughly $6.2 billion in free cash flow after spending $6.7 billion on research and development. That amount comfortably covered its dividend obligations, which totaled $6.1 billion so far this year. Although this suggests a relatively tight payout ratio, there appears to be little cause for concern. Free cash flow is only slightly lower compared to the $7.5 billion the company posted during the same period last year. Johnson & Johnson (NYSE:JNJ) currently offers a quarterly dividend of $1.30 per share and has a dividend yield of 3.18%, as of July 17. While we acknowledge the potential of JNJ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-07-2025
- Business
- Yahoo
Johnson & Johnson's (JNJ) Dividend Track Record: Reliability in Uncertain Times
Johnson & Johnson (NYSE:JNJ) is included among the 14 Best Pharma Dividend Stocks to Buy in 2025. A smiling baby with an array of baby care products in the foreground. Johnson & Johnson (NYSE:JNJ) has long been considered one of the most dependable dividend stocks, having increased its payouts for 63 consecutive years, including a 4.8% raise earlier this year. This consistency earns it a place among the elite Dividend Kings, a group of companies with more than 50 straight years of dividend growth. Johnson & Johnson (NYSE:JNJ)'s second-quarter results once again underscored the strength behind its dividend. During the first half of the year, the company generated roughly $6.2 billion in free cash flow after spending $6.7 billion on research and development. That amount comfortably covered its dividend obligations, which totaled $6.1 billion so far this year. Although this suggests a relatively tight payout ratio, there appears to be little cause for concern. Free cash flow is only slightly lower compared to the $7.5 billion the company posted during the same period last year. Johnson & Johnson (NYSE:JNJ) currently offers a quarterly dividend of $1.30 per share and has a dividend yield of 3.18%, as of July 17. While we acknowledge the potential of JNJ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None. Sign in to access your portfolio
