A battle that feels older than you can think: Coca-Cola (KO) vs. Pepsi (PEP). But these two companies are not only fierce competitors when it comes to soft drinks, but also on the stock market, especially when it comes to dividends.
One special feature that both companies share is that they are dividend kings. In other words, companies that have been continuously increasing their dividends for over 50 years. Only 48 other companies worldwide have managed to do this over all that time, which makes Coca-Cola and Pepsi very special companies. After all, who can claim that even in times of recession they manage to maintain their profits in such a way that the dividends can always be increased further?
But in which of the two companies is it more sensible to invest? We answer this question and more in the following analysis
Available in over 200 countries worldwide, more than 400 non-alcoholic brands and an average of 2 billion consumers every day. These are just some of the key figures that make it clear how big Coca-Cola actually is. Few companies in the world have anything like the reach that Coca-Cola has. This is also reflected in its sales. In 2021, sales totaled nearly $39 billion and have grown even more since then. Also, the market capitalization is of 264 billion US dollars shows the power held by Coca-Cola.
The Coca-Cola Company's 20 brands account for more than $1 billion in annual sales. Coke in particular, which is the world's best-selling non-alcoholic beverage, drives up sales, but other popular beverages such as Coke Zero, Fanta, Sprite and Mezzo Mix also contribute their share to sales.
Coca-Cola continues to expand its market through, for example, the expansion of Simply, ready-to-drink juices, or Ayataka, the fastest growing tea brand in Japan. Despite Coca-Cola's immense size, it "only" has a market volume of 14% in developed countries and just 6% in developing and emerging markets.
Because Coca-Cola has been facing some challenges for years, such as the declining consumption of soft drinks worldwide, new strategies have been developed to counteract this. The company has already launched healthier alternatives to popular soft drinks, such as Coca-Cola Life, which has met with only moderate success. Despite all this, the awareness and global reach of Coca-Cola products is impressive and second to none. The company has streamlined its product portfolio to focus on its top brands, has numerous product lines that bring in more than $1 billion in annual sales, and is building more product lines.
These are just some of the reasons why we believe Coca-Cola's 60-year dividend growth is likely to continue. Moreover, Coca-Cola has been paying dividends for over 100 years. In fact, the dividend king has increased its dividend by about 3.7% over the past five years, which is due to its high payout ratio of about 72%. Income investors might be interested in the dividend yield of 2.84%, which is more than double the average dividend yield of the S&P 500 Index.
In terms of reach and size of the company, PepsiCo does not have to hide from its competitor. More than 500 brands in more than 200 countries and annual sales in 2021 of over 79 billion U.S. dollars speak a clear language. The valuation of 253 billion US dollars is also in no way inferior to Coca-Cola's 264 billion US dollars.
PepsiCo's brand portfolio is also impressive, with 23 products generating annual sales of over one billion US dollars. What surprises many here is that half of the sales are generated by food and snacks. Top-selling products in these categories include Lay's, Doritos and Cheetos. However, the company is probably best known for its soft drinks, including Pepsi, Pepsi MAX, Mountain Dew, Gatorade and Aquafina. Each of these brands enjoys great popularity and loyalty among consumers.
Similar to Coca-Cola, Pepsi is struggling with the fact that soda consumption is declining worldwide. However, Pepsi has been very proactive in this regard, with just under half of its annual sales coming from its "Better for You" range of products, which contain less than 70 calories from added sugar. However, PepsiCo has also made an effort to offer more than just carbonated beverages. The company's best-selling sports drink, Gatorade, continues to capture market share worldwide. The company's tea and coffee drinks, including Lipton and Starbucks, are also among the best-selling in their respective categories.
Emerging markets in particular are a point of further focus for PepsiCo. For example, the company is experiencing low to mid-single-digit growth in North America, but significantly higher growth figures are expected in emerging markets over the long term. Comparing Coca-Cola with PepsiCo, it is noticeable that PepsiCo is less strongly represented overseas than Coca-Cola is. Low sales shares are achieved particularly in en developing and emerging countries.
PepsiCo itself has an excellent dividend growth record, having paid shareholders a higher dividend for 50 consecutive years, making it a new dividend king and dividend aristocrat. The stock today offers a yield of 2.49%, which is supported by a payout ratio of about 68%. In addition, PEP's dividend growth rate is higher than KO's, at about 7.5% over the past five years. As a result, the company has a larger potential customer base and is hedged if a business unit encounters difficulties. Investors looking for a versatile staple should consider buying PepsiCo.
Both stocks are ideal for investors pursuing a dividend growth strategy or an income strategy. Both companies are relatively crisis-proof due to their product portfolios and have paid increasing dividends even in times of recession. For these reasons, we rate both companies highly. However, before you decide to buy either stock, you should get a clear picture for yourself.
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Inhalt Puh, Börse ist doch nicht „e wie einfach“ Das KGV, KBV, KUV und wie die ganzen Kennzahlen heißen, ist für jeden Börsenneuling
Inhalt ist eine Anlagestrategie, bei der Anleger Aktien von Unternehmen kaufen, die regelmäßige Dividendenzahlungen ausschütten. Das Ziel dieser Strategie ist es, ein regelmäßiges
Inhalt Viele Anleger fragen sich ständig, warum Aktien fallen, nachdem die Ergebnisberichte der Unternehmen veröffentlicht wurden, besonders, wenn die Entwicklung laut des Berichts
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