PepsiCo (NASDAQ:PEP) reported earnings last week and it easily beat expectations. Revenue of $20.2 billion for the second quarter was better than the $19.5 billion Wall Street analysts were projecting from the soft drink giant. And its adjusted per-share profits of $1.86 also were well above the $1.74 analysts were expecting.
The company did raise its guidance for revenue, however, PepsiCo didn't do the same for its earnings, which it continues to project will growth at around 8% for the year. Inflation has been putting pressure on the company's financials but PepsiCo has proven to be resilient thus far in being able to raise prices without suffering an adverse impact on its financials. The company is also going to shrink product sizes and look at other efforts to keep its costs down.
Year to date, PepsiCo's stock has remained fairly steady, down less than 2% while the S&P 500 has fallen by 19%. It also pays a yield of 2.7% which is a decent payout that can give investors some solid recurring income – it would take an investment of just over $37,000 to result in annual dividend income of $1,000.
At 25 times earnings, PepsiCo isn't a terribly cheap stock to own. However, that's in line with its five-year average and at a time when many companies are struggling with inflation and to maintain profitability, PepsiCo has proven to be one of the safer stocks to own right now. And that may very well be worth a higher premium.
If you're looking for a safe stock that also pays a good yield, PepsiCo is an investment you should consider.
