Best Dividend Stock to Buy Right Now: PepsiCo vs. Coca-Cola

PepsiCo (NASDAQ: PEP) and Coca-Cola (NYSE: KO) run the types of businesses that typically only make headlines during earnings season. Compared to quantum computing, artificial intelligence, or space stocks, their businesses are tame with few thrills.

That, however, is what also makes them attractive as investments. Instead of wildly inconsistent quarters and the promise of future profitability, each company is generating billions of dollars in net income every quarter that it can pass on to shareholders as dividend payouts.

Between the two, we'll look at which one may be more deserving of a portfolio spot right now.

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Drinks with a side of chips

Pepsi has a more diversified portfolio than Coca-Cola, with a broader focus on both beverages and snacks. Overall, the snack business is a good one to be in, with Grand View Research forecasting that the global snack market size will grow from just under $720 billion in 2024 to a little over $922 billion by 2030.

Some of its most well-known snack offerings include Doritos, Lay's, Cheetos, Fritos, and Funyuns. That division is a larger revenue contributor than drinks, accounting for 58% of the company's net revenue in 2025.

For its food division, PepsiCo is seeing growth in its away-from-home business, where the company partners with restaurants, event operators, campus dining, and other outlets to provide its products. "The away-from-home business is growing 3x the average of the company," CEO Ramon Laguarta said on the company's Q1 2026 earnings call. For that first quarter, Pepsi had a strong showing, reporting net revenue climbed 8.5%, operating profit jumped 24%, and earnings per share shot up 27%.

Beverage concentration

As mentioned earlier, compared to Pepsi, Coca-Cola is more focused on beverages. There are pros and cons to that focus, but the company showed in its Q1 2026 earnings results that its approach is working out well.

It's finding new success with different product variations, with volume for Coca-Cola Zero Sugar increasing by 13% in the first quarter. That can continue to be a revenue growth engine for the company, as the global zero-sugar beverage market is expected to grow from around $79 billion in 2026 to just under $200 billion by 2034, according to Fortune Business Insights. It also announced it launched Sprite prebiotic in China, which is supposed to aid in digestive health.

In addition to the zero-sugar options, Coca-Cola is also seeing noticeable volume growth in categories it wasn't previously known for, like tea and water. For 2026, the company expects organic revenue to grow between 4% and 5%, which is welcome news that it can increase sales without mainly relying on price hikes that could alienate cash-strapped consumers.

The winning dividend stock

Each company could be a strong addition to a portfolio, but I would lean more toward investing in Coca-Cola. Pepsi has to navigate changing consumer tastes and faces the challenge of finding the right price points for both its beverage and food portfolios, while Coca-Cola mainly just has to stay focused on drinks. It has bragging rights, ranking sixth on Forbes magazine's list of the world's most valuable brands. Pepsi is also on the list, but it's ranked significantly lower at 36.

For valuation, Coca-Cola has a forward price-to-earnings (P/E) ratio of 24.1, compared to Pepsi's 18.3, offering two different ways to look at the stock. With a higher forward P/E, Coca-Cola is valued more richly, but it also means investors are expecting higher earnings. Coca-Cola just has to execute to meet those larger expectations.

For the final part of the battle, Pepsi's dividend payout has a larger yield of 3.6% compared to Coca-Cola's 2.7%, but Coca-Cola's operating margin is typically higher. That allows for more sustainable dividend payouts and dividend hikes. Coca-Cola has increased its dividend payout for 64 consecutive years, while Pepsi has increased its own for 54 consecutive years.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.