Two Top Consumer Stocks to Buy Now: Realty Income and PepsiCo

The article discusses two consumer sector stocks, Realty Income and PepsiCo, that are highly attractive in the current market. Realty Income is a net lease real estate investment trust with a large market cap and a reliable dividend, currently at 5.5%. PepsiCo is a consumer staples company with diverse businesses and a strong global distribution system, making it a key partner to retailers. Both companies are considered foundational passive income investments.

In the current market, two consumer sector stocks stand out as highly attractive investments: Realty Income (NYSE: O) and PepsiCo (NASDAQ: PEP). Both companies offer strong dividend yields and foundational passive income potential.

Realty Income: A Reliable Dividend Stock

Realty Income, a net lease real estate investment trust (REIT), is known for its large yield and reliable dividend history. With a market cap over three times larger than its closest peer, Realty Income benefits from advantageous access to capital markets and a low cost of capital. The company's investment-grade balance sheet supports its ability to generate reliable rents, allowing it to pay a dividend yield of 5.5% [1].

Realty Income's geographically diverse portfolio, spread across the United States and Europe, includes 75% retail assets, a highly liquid property segment. The company's expansion into new areas, such as casinos, data centers, loans, and asset management, further enhances its growth prospects. However, Realty Income's size means it is a slow-growth business, making it a foundational passive income investment.

PepsiCo: A Dividend King in the Consumer Staples Sector

PepsiCo, one of the largest consumer staples companies globally, offers a diverse portfolio of businesses including beverages, salty snacks, and packaged foods. Its strong global distribution system and well-known brands make it a key partner to retailers. PepsiCo's dividend history, with over five decades of annual increases, underscores its robust business model and reliable execution [2].

Currently, PepsiCo's stock price has been weak, pushing its dividend yield to a historically high 3.8%. This presents an opportunity for long-term dividend investors. While PepsiCo is not hitting on all cylinders today, its Dividend King status suggests it will muddle through and return to better performance. The company's recent acquisitions, such as a Mexican-American food maker and a prebiotic beverage company, indicate a return to its successful long-term growth playbook.

Investment Considerations

Both Realty Income and PepsiCo offer attractive opportunities for income investors. Realty Income provides a high yield and reliable income stream, while PepsiCo offers a faster-growing dividend with a strong business foundation. Together, they can create a balanced dividend portfolio. However, investors should consider the risks associated with each investment, such as Realty Income's slow growth and PepsiCo's current business challenges.

References

[1] https://finance.yahoo.com/news/2-favorite-stocks-buy-now-071500975.html

[2] https://www.aol.com/motley-fool-just-ranked-biggest-153800524.html