Coca-Cola Yields Just 2.2% Compared to 4.3% for PepsiCo. Here's the Better Dividend King Stock for Generating Long-Term Passive Income.

The non-alcoholic beverage space is dominated by two players: Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP). They share many similarities, from their portfolios to the fact that both are Dividend Kings that have increased their payouts for 50 or more consecutive years. Coca-Cola has boosted its payouts for 64 consecutive years, while Pepsi has increased its dividend payout for 54 consecutive years.

That said, that's where those similarities start to end, especially regarding those dividends. As of this writing, Coke's dividend yields 2.2%, while Pepsi's yields almost double at 4.3%. On the surface, Pepsi would seem to be the better buy, as it offers a significantly higher dividend yield than Coca-Cola while having similar business characteristics. Digging a little deeper, however, shows there are more considerations at hand than the yield alone.

Image source: The Motley Fool.

Similar beverages, different directions

While both companies have comparable beverage portfolios, Pepsi is technically more of a snack company, with 58% of its 2025 revenue coming from its snack division and 42% from its beverage segment. In theory, that seems like a business model that would work out, as the beverages complement the snack division and provide a safety net for the company as a whole. If one division experiences a sales slump, it can be offset by the other's performance.

However, based on the recent performances of both companies and the divergent directions of their stock prices, it appears that split focus is currently hurting Pepsi more than helping it. Over the last 12 months, while the Pepsi stock price has dropped roughly 10%, the Coca-Cola stock price has shot up nearly 33%, with the S&P 500 up around 12% over the same period.

In its recent 2026 third-quarter earnings report, Pepsi beat CNBC-tracked forecasts: revenue of $25.2 billion exceeded expectations of $24.9 billion, and adjusted earnings per share (EPS) of $2.3 exceeded forecasts of $2.2. It also reported a modest boost in net income to $3 billion, up from $2.6 billion in the prior-year period.

Still, there are challenges ahead, as its North American beverage and snack businesses are facing weaker sales. To add insult to injury, the popular Yum Brands (NYSE: YUM) chain, KFC, recently announced it's switching from Pepsi to Coca-Cola in its U.S. restaurants, starting in 2027.

Coca-Cola will report earnings on Oct. 27, so investors will get some new insights then. But if it repeats the performance it delivered in the second quarter of 2026, everything will be humming along.

For the second-quarter report, Coca-Cola not only beat estimates but also raised its full-year forecast. Coke expects comparable EPS growth to fall between 9% and 10%, up from a previous forecast of 8% and 9%. It also expects organic sales to increase approximately 5%, up from previous guidance of 4%-5%.

The final investing verdict

Between the two companies, even though Pepsi offers a higher yield, I would still rather invest in Coca-Cola for long-term income potential. They both offer stability as Dividend Kings, but Coca-Cola's more focused strategy is showing up in its stock price performance.

Over time, despite the higher yield, losses in the Pepsi stock price could erode the returns from those dividend payouts. Both companies still have to figure out the right balance between raising prices to cover rising costs while not increasing them so much that consumers push back.

Still, Coca-Cola mainly has to worry about that in its core business. Pepsi has to figure that out for both snacks and beverages.

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