PepsiCo

PEP

Market cap $199B

PepsiCo (PEP) closed at $141.36 in the latest trading session, marking a +1.04% move from the prior day.

PEP is leaning on permissible snack brands to counter uneven PFNA volumes as value sensitivity and shifting preferences pressure core snacks.

PepsiCo, Inc. is upgraded from Sell to Hold as valuation compresses to a 10-year low and activist Elliott Management drives cost-cutting initiatives. PEP faces structural headwinds: food volume stagnation, shifting consumer preferences, and a risky 100%+ dividend payout ratio amid declining cash flow efficiency. Activist involvement has prompted management to agree to price cuts and cost reductions, but long-term business quality concerns persist.

PepsiCo trades at a compelling valuation, with a 4%+ dividend yield and less than 20x forward earnings, offering an attractive risk/reward profile. PEP's operational turnaround hinges on margin expansion via cost cuts, AI, robotics, and lower commodity pricing, not aggressive top-line growth. Management is prioritizing cost structure optimization, portfolio simplification, and productivity, including closing plants and reducing SKUs to unlock profitability.

Dividend investing is increasingly vital amid higher rates and inflation, offering passive income and wealth compounding for retirement. Anchoring a portfolio with quality dividend ETFs like SCHD, FDVV, or CGDV can provide reliable income and potential outperformance. Combining high dividend growers (e.g., V, MA, WM) with stable high-yielders (e.g., VZ, O, ADC, STWD) balances growth and income.

PEP's discounted valuation, resilient brands and steady international growth highlight solid fundamentals despite near-term volume and cost pressures.

Illinois Tool Works is a highly diversified, high-margin industrial conglomerate with a rock-solid dividend. PepsiCo yields considerably more than Illinois Tool Works and commands a less expensive valuation.

New food guidelines shared by Health and Human Services Secretary Robert F. Kennedy Jr. this week have consumers, health experts and food companies taking note.

I present my top 10 high-yield dividend-paying companies for 2026, emphasizing sustainable income, growth, and capital appreciation. Selections include AXA, Allianz, PepsiCo, Verizon, Nestlé, Realty Income, VICI Properties, Altria, Chevron, and Petrobras, all meeting strict yield, valuation, and size criteria. These companies offer attractive forward dividend yields, strong dividend growth records, competitive industry positioning, and current valuations that provide a margin of safety.

As we begin 2026, investors may be eying Coca-Cola (KO) and Pepsi (PEP) stock for defensive safety.