Coca-Cola vs. PepsiCo: Which One Will Make You Richer?
Key Points
Coca-Cola has a leaner, more efficient business than PepsiCo, but PepsiCo generates more revenue.
PepsiCo has been increasing its annual dividend at a faster rate than Coca-Cola.
Coca-Cola and PepsiCo are both Dividend Kings.
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When it comes to the beverage and food segment of consumer packaged goods, Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP) are in leagues of their own. They both own household-name products and have distribution across the globe. They're also stock market staples with decades of consistency and annual dividend payout increases.
Both companies can be good pieces to a portfolio, but if you're looking for the one that can make you richer, the answer depends on the potential route you want to take.
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A key difference between Coca-Cola and PepsiCo is that Coca-Cola focuses solely on beverages, while PepsiCo sells beverages and snacks. This has led to Coca-Cola operating more efficiently, but PepsiCo being more diversified and less dependent on a single category. Its revenue is routinely double Coca-Cola's.
At their sizes, neither company will have tech-like growth, but PepsiCo is currently returning more value to its shareholders than Coca-Cola. PepsiCo is increasing its dividend at a faster rate (up 89% in the past decade versus 51%), buying back more stocks, and offering a higher initial dividend yield.
If you're looking for a more sure path, Coca-Cola is the one. It's efficient, high-margin, and safe. If you're looking for higher upside from this point forward, PepsiCo should be your choice. It's diversified and returning value to shareholders at a high rate.
Again, don't expect tech-like returns from either company, but they're both Dividend Kings -- companies that have raised their dividends for at least 50 consecutive years -- that can produce consistent income and continue to grow over time.
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Stefon Walters has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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