Largest Consumer Staple Companies Exposed in New Motley Fool Research. Unveiling the Overshadowed Dividend Monarch.
In the dynamic world of consumer staples, PepsiCo (PEP 1.12%) stands out as a beacon of resilience and growth. With a market cap of approximately $200 billion, the company is one of the largest players in the sector, known for its diverse portfolio of beverages and snack foods.
PepsiCo's main activity spans beyond the production of its iconic soft drinks. The company's business extends to leading positions in the salty snack segment, with Frito-Lay, and the packaged food segment, with Quaker Oats. This diversification makes PepsiCo one of the most diversified companies on the top-10 list, similar in diversity to Unilever (NYSE: UL).
Recently, PepsiCo has been flying under the radar a bit, despite its impressive performance. The company is one of three beverage makers on the list, with Coca-Cola (KO 0.94%) at No. 4 and Anheuser-Busch InBev (NYSE: BUD) at No. 10. PepsiCo's stock, however, has taken a hit, with a drop of more than 20% from its 2023 highs, making it the worst result from the Dividend Kings grouping.
However, this dip could be an opportunity for long-term dividend investors. PepsiCo's dividend yield has increased to 3.8%, which is toward the high end of its historical yield range. As a Dividend King, having increased its dividend annually for 53 consecutive years, PepsiCo is a reliable choice for those seeking steady income.
Moreover, PepsiCo's price-to-sales and price-to-book-value ratios are both well below their five-year averages, indicating that the stock might be undervalued.
PepsiCo's organic sales growth in the second quarter was 2.1%, which is less than half the 5% growth of Coca-Cola. However, the company's recent situation is considered a personal bear market. Yet, if you like owning Dividend Kings with reliable businesses, PepsiCo can still be an attractive long-term investment.
PepsiCo's stock performance over the past three months has been the best on the top 10 list. Despite the challenges faced by the market, PepsiCo's price-to-earnings ratio is sitting around the longer-term average, suggesting a stable financial position.
Lastly, like other names on the list, PepsiCo is large enough to act as an industry consolidator, buying smaller companies to further strengthen its position in the market.
In conclusion, PepsiCo's current performance could be an opportunity for long-term dividend investors seeking a reliable and diversified company with strong brand recognition and a history of steady growth.
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