The food and beverage sector broke below its support level since late last year. This downtrend is potentially over after PepsiCo (PEP) posted second-quarter results.
Pepsi earned $2.28 a share, even though revenue grew by 0.8% Y/Y to $22.5 billion. The firm expects revenue to grow by 4% Y/Y in 2024. Its cash return of $8.2 billion to shareholders is especially notable. Pepsi will pay dividends worth $7.2 billion and will buy back $1.0 billion in shares.
Income investors may not find the 3.2% dividend income yield attractive. Currently, short-term Treasury bonds pay over 5% and have no risk of principal. Investors who are exempt from state income taxes would get a higher total return.
Related Investments
Celsius Holdings (CELH) is a better deal. The stock peaked after reaching a bearish “double top” at $95.00. Investors are worried that inventories are on the rise, which would pressure the drink supplier’s profit margins.
Coke (KO) trades at a premium. However, it is highly profitable and the stock has positive momentum. KO stock is attractive should the share price ever dip.
Your Takeaway
Investors should continue to hold Pepsi stock. This consumer staple consistently outperforms, beating the market’s expectations. Coke and Celsius are alternatives to consider. So is Monster (MNST) and Keurig (KDP). However, Pepsi has a stronger brand value.
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