Some Pep for Your Portfolio?

If you’re in the market for stable, established companies with track records of solid dividend growth, consider PepsiCo (Nasdaq: PEP). In addition to its namesake Pepsi line, the company boasts 22 brands that generate more than $1 billion apiece in annual revenue, including Gatorade, Mountain Dew, Tropicana, Quaker, Lay’s, Doritos and Cheetos. Currently, PepsiCo dishes out $0.805 per share quarterly, with its dividend recently yielding 3.25 percent. The company has increased its dividend annually for 45 consecutive years (through 2017), and further increases are likely. PepsiCo’s wide moat, featuring intangible assets, cost advantages and brand power, keeps competitors at bay. And it boasts strong relationships with distributors and retailers. One challenge facing PepsiCo is that consumer tastes in the U.S. are trending toward healthier products. In response, PepsiCo is adding healthier items to its lineup, such as Tropicana Essentials Probiotics, while promoting existing healthier options such as its juices and aiming to reduce the sodium content in its foods. Meanwhile, international demand for much of PepsiCo’s offerings is growing. PepsiCo is cutting costs by increasing automation, recently implementing robotic truck loaders at shipping centers and automating some packing processes. With a solid dividend and some underappreciated growth catalysts, PepsiCo is worth considering for your long-term portfolio.