Ahead of its 15% dividend increase, PepsiCo moved up a spot on the Most Watched Stocks List. The company’s latest payout of 92.5 cents per share has an ex-dividend date on May 31.
PepsiCo recently acquired Bare Snacks, after identifying a growing trend of U.S. consumers eating healthier foods. Bare Snack’s acquisition fits perfectly with the company’s vision of making more nutritious products. “Healthy snacks” now accounts for 45% of the company’s total revenue and is slated to increase going forward as the sales of soft drinks decline. The double-digit dividend increase has partly come off the back of a corporate tax reduction from 35% to 21%, which directly impacts the bottom line, freeing up more profits that can be paid out as dividends.
Fundamentally and technically, Pepsi could be a fantastic buy. The stock has fallen from $120, which it traded at in late January, to now stand at a very strong technical support level of $100. Couple that with the fact that the stock only trades at 17.5 times 2018 earnings despite having such a stellar dividend growth record of 45 consecutive years.
PepsiCo historically trades at a yield of close to 3%. This double-digit dividend increase has caused its yield to shoot up to 3.7%. If the stock had to trade back to its historical 3% yield then either the stock price has to rise or the dividend has to drop. Given the stock’s technical strength at $100, the former looks more likely.
Other stocks to move up the list include Home Depot, which went up two spots, Gilead Sciences, which went up two spots, and General Mills, which also went up two spots.
Our Most Watched Stocks List is a user-generated, interest-based ranking of dividend-paying stocks, giving you a real-time snapshot of buying interest in the market. Generated by our Premium members’ watchlists, it’s aggregated and ranked by the most watched criteria.
The list has been designed to help income investors navigate the top dividend stocks being tracked by one of the world’s most advanced investing communities.
