Pepsico Inc (PEP)

[jacktrades]

http://seekingalpha.com/article/2018301-pepsico-ceo-discusses-q4-2013-results-earnings-call-transcript?page=8

We have several great tasting cola product variations using zero calorie natural sweeteners blended with sugar that we’re testing in various markets in the world. And so far, these test results are promising. However, our U.S. launches of these sweeteners will begin this year, primarily with non-cola products, to build and test consumer acceptance before we launch low-calorie naturally sweetened cola products.

So, based on our assessment of the strong and sustainable cash flow generation capacity of the portfolio, driven by our expectation of mid-single digit organic revenue growth, robust productivity programs, and efficient capital investment, we’re pleased to announce today that we’ll substantially increase our cash returns to shareholders in 2014. This decision is consistent with our commitment to disciplined capital allocation and our strong bias to returning cash to our investors.

First, we’re increasing our dividend per share by 15%, beginning with our 2014 June payment, to $2.62 on an annualized basis. This represents the 42nd consecutive year of annual dividend increase, and approximately 60% payout ratio based on 2013 core EPS. At today’s stock price, it represents a 3.2% yield and will bring our 10-year annualized dividend per share compound annual growth to 11%.

And we’re further increasing expected shareholder cash returns with a targeted $5 billion share repurchase target. This represents a 67% increase over our 2013 repurchase, and is approximately 4% of our market capitalization. While doing so, we expect to maintain tier one commercial paper access, enabling us to retain low cost, highly accessible, financing.

Taken together, these actions reflect a 35% increase in total shareholder cash returns compared to 2013, and will bring our cumulative 10-year cash returns to shareholders to over $60 billion. As many of you know, we have stated disciplined capital allocation as a top priority for our management and our board, and we trust these actions will be seen by our shareholders as tangible evidence of this commitment.