PepsiCo's Snack‑Soda Synergy: A Consumer Combo Worth Buying

Key Points

• PepsiCo enjoys a measure of safety because of the breadth of its food and beverage portfolio.

• The stock will likely make money in the long term, but gains could be relatively modest.

• 10 stocks we like better than PepsiCo ›

There are many approaches to investing. And individual investors each bring unique insights, experiences, and perspectives to the table.

And yet despite the disparities, everyone who buys stocks has the same goal: to make money. The flip side of this is that every shareholder of every stock thinks the same thing: I sure don't want to lose money.

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This fear of losing money can keep them on the sidelines. They want to feel that an investment is safe before risking the money that they worked hard to get. This is why I believe that PepsiCo (NASDAQ: PEP) is a stock that many should consider. It's one of the safest investments on the stock market and can provide a foundation for a larger portfolio.

Image source: Getty Images.

Of course, safety means different things to different people. So, I will clarify what I mean. But first, let me explain why PepsiCo stock is almost always a good consideration for investors.

A consumer combo worth buying

Everyone knows that PepsiCo sells Pepsi. The iconic cola began selling under the name Pepsi-Cola in 1898. As of 2024, it's the fourth most popular carbonated beverage in U.S., behind only Coca-Cola, Dr. Pepper from Keurig Dr Pepper, and Sprite, according to Beverage Digest.

Many people also know that PepsiCo isn't limited to its namesake beverage. The company owns the country's sixth most popular carbonated beverage as well, which is Mountain Dew. And on top of these two bestsellers, the company owns dozens of other beverage brands, including Gatorade.

However, PepsiCo is far more than a beverage empire. The company owns snacks such as Lay's potato chips, food such as Quaker oatmeal, and more. Indeed, the company's portfolio is quite large and continues to get bigger every year.

Consumer tastes do shift. But the advantage for Pepsi is that there's usually something in its portfolio that's in style. Consider that over the last 15 years, the most that quarterly revenue has ever been down is by less than 7%. In other words, if revenue drops in one area, there's usually something else to take up the slack.

PEP Operating Revenue (Quarterly YoY Growth) data by YCharts; YoY = year over year.

The profitability in this business is strong. In the first half of its fiscal 2025, the company had an operating margin close to 11%. Considering its huge scale, this means that it has earned over $12 billion in operating income over the last 12 months.

Having a consistent flow of cash to work with helps PepsiCo maintain its competitive edge. The consumer packaged-goods industry has fairly low barriers to entry, meaning new upstart players frequently emerge. But the company has the means to acquire the most promising ones before they become problematic.

For example, it acquired prebiotic soda company Poppi for almost $2 billion earlier in 2025. And not long thereafter, the company even launched a prebiotic version of its iconic Pepsi flavor.

If PepsiCo were only a beverage company, then the stock simply wouldn't have the same measure of safety as it has by having the extra component of its business, which is food. That's why the snack-soda synergy is worth buying.

Some thoughts on PepsiCo's safety

By saying that it's a safe stock, I mean that I believe the stock will make money for investors over the next five years or more with limited downside risk. That said, the upside may be modest compared to other potential investments.

PepsiCo stock currently trades at 26 times earnings, which isn't cheap. It's facing headwinds with second-quarter net revenue only up 1% year over year. And earnings per share dropped sharply, in part, due to higher expenses. Moreover, it has opportunity for growth but, being a scaled-up business already, it takes a lot to move the needle.

In short, the business' growth has slowed, and the stock isn't cheap, which might mean that it struggles to keep up with the S&P 500 long term. For perspective, it's underperformed over the past decade.

PEP Total Return Level data by YCharts.

For investors looking for a safe position in their portfolios, there may be both safety and more upside potential with a simple S&P 500 index fund.

However, the company does also pay a reliable quarterly dividend, something it started doing over 50 years ago. With a high yield at 3.8%, as of this writing, this may tip the scales back to a PepsiCo investment instead of settling for an index fund.

It probably won't be the highest performer in a portfolio. But a broad range of products and massive global scale make it a safe stock for most investors. And with an attractive dividend yield, PepsiCo could be a dividend stock to buy today.

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Jon Quast 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.