This Dividend Stock Yielding Quadruple the S&P 500 Looks Like a Buy Right Now
Key Points
PepsiCo has been facing some challenges, but it's still growing.
Its dividend has been growing, too.
It will pay you to wait for a completed turnaround.
- Motley Fool Issues Rare "Total Conviction" Buy Alert ›
If you haven't given dividend-paying stocks much thought, you might want to start. Check out the table below to see why:
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Dividend-Paying Status Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » |
Average Annual Total Return, 1973-2025 |
|---|---|
|
Dividend growers and initiators |
10.22% |
|
Dividend payers |
9.20% |
|
No change in dividend policy |
6.87% |
|
Dividend non-payers |
4.21% |
|
Dividend shrinkers and eliminators |
(0.96%) |
|
Equal-weighted S&P 500 index |
7.74% |
Data source: Ned Davis Research and Hartford Funds.
See? Dividend-paying stocks are not just for retirees. You can use dividend income to live off of -- or you can use it to invest in more stocks.
Image source: The Motley Fool.
Here's a solid contender for your long-term portfolio: PepsiCo (NASDAQ: PEP). Its dividend recently yielded a fat 4.4% -- which is more than quadruple the S&P 500's dividend yield of about 1.1%.
Is it going to make you a mint within a few years? Nope -- it's not a growth stock. But it's a grower -- with third-quarter revenue up 3% year over year. Its dividend is growing, too. The total annual payout of $5.92 per share is up from $4.60 in 2022 and $3.22 in 2017.
PepsiCo should be especially appealing if you're worried about a stock market crash, because people tend to buy its offerings in good economies and bad -- largely because they only cost a few dollars. The company's snacks-and-drinks portfolio features brands such as Lay's, Doritos, Cheetos, and Quaker alongside Gatorade, Pepsi-Cola, Mountain Dew, and SodaStream.
Another plus is that the shares look attractively priced at recent levels, with a forward-looking price-to-earnings (P/E) ratio of 15.5, well below the five-year average of 20.3, and its price-to-sales ratio of 1.86, well below the five-year average of 2.48.
PepsiCo has struggled in recent years as consumers became more health-conscious -- with some on weight loss drugs that reduce appetites. But it has been responding by cutting some prices and by introducing healthier products and ingredients. It's working on turning its fortunes around -- and it's paying shareholders well to wait.
Should you buy stock in PepsiCo right now?
Before you buy stock in PepsiCo, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PepsiCo wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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*Stock Advisor returns as of November 1, 2026.
Selena Maranjian 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.
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