Sometimes on Wall Street, you need to take a bold step and embrace a bit of risk. While market sentiment might be gloomy, it doesn’t automatically equate to a stock being a poor choice. In fact, going against the crowd by buying when others are selling can lead to significant long-term gains, especially if you’re investing in companies with a proven track record of excellence. That’s precisely why you shouldn’t delay any longer before adding PepsiCo stock to your portfolio. Let me share three compelling reasons to make that move today.
### 1. The Stock’s Current Position
PepsiCo, a juggernaut in the consumer staples arena, has seen its stock value plummet by nearly 25% since the start of 2023. That’s a hefty drop for this titan. Historically, whenever PepsiCo has faced such steep declines, it’s managed to claw its way back and achieve new peaks. Although there’s no assurance this trend will repeat, the core business dynamics have stayed the same since 2023. The company is as robust as ever.
Interestingly, this downturn has pushed the dividend yield to approximately 3.6%, marking one of the highest points in the company’s history. A high dividend yield often signals attractive stock pricing, suggesting that PepsiCo might be undervalued right now. Moreover, their price-to-sales and price-to-earnings ratios, which are standard valuation tools, currently sit below their average over the past five years.
### 2. Resilience and Recovery
As highlighted earlier, PepsiCo’s foundational business strategy hasn’t shifted since early 2023. The company has relied on a successful blueprint for ages, resulting in a longstanding streak of wins. This is evident in their status as a Dividend King, belonging to a select group of companies that have consistently increased dividends for 50 consecutive years or more. Such achievements aren’t mere luck; they’re the result of steady execution in both favorable and challenging markets.
Considering the past 25 years, not to mention 50, brings to mind several turbulent periods like the dot-com crash, the Great Recession, and the pandemic, yet PepsiCo weathered each well, expanding its operations and boosting investor dividends.
Despite the current challenges, the company’s management is investing in future growth. They’ve recently acquired Siete Foods, a versatile Mexican-American company, and taken full ownership of Sabra, a Middle Eastern food brand they previously co-owned. While these purchases might not revolutionize the company, they reflect a commitment to ongoing progress, a trait that investors can count on.
### 3. Versatility in Growth
These acquisitions also highlight PepsiCo’s business diversification. Siete offers a range of products from chips to packaged foods, and Sabra specializes in dips, blurring the lines between snack and food categories. Given that PepsiCo’s flagship product is a beverage, it’s evident the company has significant influence across the food and beverage sectors, unlike competitors limited to one area.
This diversity offers a strategic advantage. For investors, PepsiCo serves as an all-in-one choice within the consumer staples space, offering multiple avenues for growth. If one segment underperforms, the company can shift its focus and resources to more promising areas. Additionally, PepsiCo holds a unique position to act as a consolidator across these three distinct market segments.
### Seize the Opportunity
Although PepsiCo’s recent financial performance hasn’t dazzled (hence the current market ambivalence), the company’s illustrious history suggests a rebound is likely. The acquisitions of Siete and Sabra are proactive steps toward a stronger future, underlining management’s foresight.
With its dividend yield near historical highs and its standing as a Dividend King, PepsiCo appears to be a must-have for any long-term dividend-focused investor. Isn’t it time to buy while the opportunity is ripe?
