PepsiCo's Stock Outperforms Coca-Cola, Offering More Millionaires

PepsiCo (PEP) has outperformed Coca-Cola (KO) in stock price growth over the past 50 years, despite Coca-Cola's status as a Dividend King with a 62-year streak of annual dividend increases. PepsiCo's success is attributed to its diverse portfolio, including snack foods, which account for 50% of its revenue and generate higher profit margins than its beverage business. In contrast, Coca-Cola relies more on royalty payments and outsources production to third-party bottlers.

PepsiCo (PEP) has defied expectations and surpassed Coca-Cola (KO) in stock price growth over the last 50 years, despite the latter's status as a Dividend King with an impressive 62-year streak of annual dividend increases [1]. This unexpected success can be attributed to PepsiCo's diverse portfolio, which includes a vast array of snack foods generating higher profit margins than its beverage business [2].

Over the past two decades, both Coca-Cola and PepsiCo have proven themselves to be dividend growth powerhouses in the beverage industry. Coca-Cola's dividend growth has been remarkable, with a 288% increase from $0.125 per share in 2004 to $0.485 per share today [1]. This translates to a compound annual growth rate (CAGR) of 7.01% over two decades [1]. In contrast, PepsiCo has outpaced Coca-Cola's impressive growth, with a 489% increase from $0.23 per share in 2004 to $1.355 per share today [1]. This represents a CAGR of 9.27% over the 20-year period [1].

However, PepsiCo's success is not solely based on its dividend growth. Its diverse portfolio, which includes snack foods accounting for 50% of its revenue [2], has played a crucial role in its outperformance of Coca-Cola. In contrast, Coca-Cola relies more on royalty payments and outsources production to third-party bottlers [2].

PepsiCo's focus on snack foods, which have higher profit margins than beverages [2], has enabled the company to generate substantial revenue and earnings. In contrast, Coca-Cola's reliance on royalty payments and outsourcing production has limited its control over revenue and profitability.

In conclusion, PepsiCo's 50-year outperformance of Coca-Cola in stock price growth can be attributed to its diverse portfolio, which includes a vast array of snack foods generating higher profit margins than its beverage business. This focus on snack foods, combined with its impressive dividend growth, has enabled PepsiCo to outpace its longtime rival despite Coca-Cola's status as a Dividend King.

References:

[1] Benzinga and Yahoo Finance LLC. Coca-Cola And Pepsi Have More Than Tripled Their Dividends Over The Last 20 Years, Can Keurig Dr Pepper Do The Same? https://finance.yahoo.com/news/coca-cola-pepsi-more-tripled-152702067.html
[2] Statista. PepsiCo, Inc. Revenue Breakdown (2017-2022). https://www.statista.com/forecasts/1011305/pepsico-inc-revenue-by-segment

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