Meet the Warren Buffett Rule That Makes This Consumer Stock a Buy With $1,000 Right Now.

PepsiCo (NASDAQ: PEP) could be a good choice for investors who want to follow Warren Buffett's investment approach. The consumer staples company's historically high 4.1% dividend yield highlights the value opportunity and sweetens the investment thesis. Here's why you may want to put $1,000 (enough to buy roughly seven shares) into PepsiCo right now.

What did Warren Buffett do?

When it came to buying stocks, Buffett had a fairly simple model. He liked to buy well-run companies while they were attractively priced. PepsiCo hits both criteria. On the business front, PepsiCo operates a diversified consumer staples business with leading positions in beverages (Pepsi) and salty snacks (Frito-Lay), as well as a well-respected packaged food business (Quaker Oats). The company's business is globally diversified, and it can stand toe-to-toe with any competitor on innovation, distribution, brand strength, and marketing.

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Indeed, there's a reason why PepsiCo is one of the world's largest consumer staples companies. Further evidence of the company's strength comes from its status as a Dividend King, with more than 50 consecutive annual dividend increases. A company can't build a streak like that by accident. But the dividend is also a sign of value.

Right now, PepsiCo's 4.1% yield is not only far above the market's tiny 1% but also toward the high end of the stock's historical yield range. That value indicator is backed up by the fact that the price-to-sales, price-to-earnings, and price-to-book ratios are all below their five-year averages. So far, PepsiCo looks like it fits the good business at an attractive price rules that Buffett lived by.

The next step is the big one

If you choose to buy PepsiCo, you need to go in with your eyes wide open. The company is facing some headwinds today, including inflation, cost-conscious shoppers, and shifting consumer tastes. History suggests it will work through this rough patch, but it could take a little time. And that's the final, and perhaps most important, Buffett rule: holding for the long term to benefit from the growth of a business over time.

Don't buy PepsiCo if you are looking to make a quick buck. That's unlikely here, as it could take a couple of years for the business to get back on track. But if you think in decades, this Dividend King consumer-staples giant could be a great addition to a passive-income portfolio built around a Buffett-like investment approach.

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.