There are just about five dozen stocks in the “Dividend King” universe, which are companies that have raised their dividends for at least 50 years. Among them is beverage giant PepsiCo (PEP), which has increased its dividends for 54 years. This year, it raised its annual dividend by 4% to $5.92 per share, implying a dividend yield of over 4.2%.
While PepsiCo boasts a dividend yield that’s three times the S&P 500 Index ($SPX), the higher yield is primarily due to its underperforming stock. PEP stock is down 10% over the last five years and is currently trading near its 52-week lows. The contrast with Coca-Cola (KO) couldn’t be starker, and the stock is trading just about 5% below its 52-week highs. The divergent price action is reflected in the dividend yield, and KO’s yield is just about 2.4%. Let's focus on PepsiCo and examine whether the stock is a buy, particularly for investors looking for high dividend stocks.
