Dividend Stocks

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>>> PepsiCo -



http://www.kiplinger.com/slideshow/investing/T018-S015-5-safe-dividend-stocks-to-buy-for-retirement/index.html?rid=SYN-yahoo&rpageid=16183&yptr=yahoo


Dividend yield: 2.9%

If President Trump’s policies do indeed break the economy wide open for growth, consumer products giant PepsiCo, Inc. (PEP) is among the dividend stocks that will be on the front lines of prosperity.

PepsiCo management’s decision to expand its branding footprint well beyond it eponymous “Pepsi” soda lineup over the years has helped smooth over difficult times for the industry. In fact, Pepsi is more than beverages, also boasting a massive snack line that has taken some of the sting out of the weakening popularity of sugary beverages.

Buried within each of PepsiCo’s six divisions are brand names that will stand the long-game test of time: Aquafina water, Gatorade sports drinks, Tropicana and Ocean Spray juice products, Aunt Jemima pancakes, Cap’n Crunch cereal, Cheetos, Cracker Jack, Diet Pepsi, and Diet Sierra Mist are among the standouts.

PepsiCo isn’t afraid to spend, either — PEP poured out $4 billion on advertising and $700 million on R&D in 2015 — so its brands should continue to saturate both the markets and consumers’ brains with each commercial or product promotion.

PepsiCo isn’t among the highest-yielding dividend stocks for retirement. Instead, it’s a dual play on both price appreciation and dividend growth.

Indeed, PepsiCo’s 2016 dividend hike to 75 cents per share (quarterly) was its 44th consecutive annual raise. Free cash flow was just under $8 billion last year, plus Pepsi has about $15 billion in cash and short-term investments, so financially, PEP is bulletproof. Better still, PepsiCo’s dividend payout ratio of 63% leaves way more room for dividend hikes than The Coca-Cola Co.’s (KO) 83% payout.

While PepsiCo isn’t terribly cheap, at 20 times forward earnings, it’s still a hair less expensive than KO, and PEP offers much better earnings growth prospects (6% vs. 2% over the next five years) to boot.

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