The Smartest Dividend Stock to Buy With $10,000 Right Now

Imagine someone breathing down your neck day and night as they watch you invest. And, to make things worse, imagine that they have the right to fire you at any time. It would probably change the way you invest, leading you to make short-term decisions instead of taking educated risks that will only play out over the long term.

Welcome to what it's like to be an institutional investor and mutual fund manager! And welcome to your big advantage over such investors, the so-called smart money. Wall Street's short-term focus is why great companies sometimes go on sale. That's the case today with this consumer staples giant and Dividend King.

Here's what you need to know.

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Play it safe or take a leap of faith?

Consumer staples companies provide products to consumers that are bought regularly, are necessity items, and that usually have fairly modest costs. They tend to be very consistent businesses over the long term and are often viewed as safe havens during market and economic dislocations. Even when their businesses are doing poorly, the pain is normally fairly modest in scope.

Dividend Kings are companies that have increased their dividend annually for 50-plus years. A company can't do that without having a very strong business model that gets executed well in both good times and bad. It shouldn't be too shocking to know that a lot of consumer staples companies are also Dividend Kings.

Right now, one of the smartest dividend stocks you can buy is PepsiCo (NASDAQ: PEP). To be fair, PepsiCo is underperforming its main beverage competitor, Coca-Cola (NYSE: KO), at the moment. In the third quarter of 2025, Coca-Cola's organic revenue rose around 6% while PepsiCo's rose by a less impressive 1.3%. PepsiCo's earnings fell 11% year over year in the quarter, while Coca-Cola's earnings rose 6%.

Conservative dividend investors will probably prefer Coca-Cola. But you are giving something up if you buy Coke over Pepsi, and that's yield. Coca-Cola's yield is a touch below 3% right now, which is really just middle of the road for the stock. PepsiCo's dividend yield is historically high at 3.7% (that's roughly 23% more income than you'd get from Coca-Cola's dividend). But they are both consumer staples giants and Dividend Kings.

Why buy PepsiCo and not Coca-Cola?

The truth is, there's nothing wrong with buying Coca-Cola right now. In fact, the stock's recent, fairly modest, pullback looks like it has opened up a buying opportunity for conservative long-term investors. But PepsiCo could be a smarter choice if you think in decades and not days.

From a business perspective, Coca-Cola and PepsiCo stand toe to toe with regard to distribution, marketing, and innovation strength. They both have very strong brands. But Coca-Cola is a one-trick pony, of sorts, because all it does is sell beverages. PepsiCo is a far more diverse business, with a strong position in beverages (Pepsi), an industry-leading position in salty snacks (Frito-Lay), and a strong position in packaged foods (Quaker Oats). There are more levers for long-term business growth if you go with PepsiCo, even though it isn't performing as well right now.

But on the performance side of things, PepsiCo isn't sitting still, hoping for the best. It is adjusting along with consumer tastes. For example, increased demand for Hispanic-oriented foods led PepsiCo to acquire Siete Foods, a Mexican-American food maker. Customer tastes shifting in a healthier direction resulted in PepsiCo buying Poppi, a probiotic drink maker, and buying the 50% of Sabra, known for hummus, which it didn't already own. Basically, PepsiCo is following the same successful playbook it has always followed, adjusting its portfolio with the world around it. It is even making subtle changes to its existing portfolio, too.

The changes being made today won't result in overnight success. That's just not how business works. PepsiCo is laying the foundation for a business upturn that will likely play out over years. Wall Street doesn't like to wait, but if you can stomach some near-term uncertainty, you can collect a historically attractive dividend yield while you wait for better days. And when those better days arrive, which history suggests is highly likely, you'll also be in line for some attractive price appreciation, too. PepsiCo's stock price is still 20% below the highs it reached in 2023.

You have to balance the risks against the rewards

The smartest investors try to make use of the unique advantages they have. If you are a small investor, your ability to buy and hold stocks for the long term is a key advantage. That allows you to benefit from the long-term growth of a business, and it also allows you to step in to buy when great businesses are facing what are likely to be short-term headwinds. PepsiCo could be a good addition to your dividend portfolio right now, with $10,000 netting you around 64 shares. And that remains true even though it is underperforming its closest rival in the beverage niche.

Reuben Gregg Brewer has positions in PepsiCo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.