Dividend Stock PepsiCo Still Pops Even With 51 Years Of Dividend Growth

Top dividend stock PepsiCo (PEP) still has pop after reporting strong second-quarter earnings and raising its full-year guidance on July 13.

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The company reported earnings per share of $2.09, beating analyst estimates of $1.96, while revenue of $22.3 billion came in above Wall Street estimates of $21.7 billion.

The company also raised its guidance. It now expects 10% revenue growth this year, up from 8% previously forecast. Strong results were not exclusive to PepsiCo, with rival Coca-Cola (KO) also reporting strong earnings on Wednesday and also raising its guidance.

Dividend Aristocrat Offers Continued Growth

For income-focused investors, PepsiCo is a staple choice, offering 51 straight years of dividend growth and a reasonable annualized yield of 2.6%. PepsiCo will pay its next quarterly dividend of $1.265 to investors of record on Sept. 1.

As share prices of PepsiCo have popped 67% over the last five years, it is also easy to overlook an impressive dividend growth rate of 7.1% over that same period.

Seeing capital gains on the Dividend Aristocrats index component is a cherry on top, and growth is certainly welcomed for a mature company like PepsiCo.

Despite rising costs, the company has been highly successful in passing on prices to consumers, which has translated to stronger results on the bottom line.

Dividend Stock Raises Prices

PepsiCo has also done well in increasing sales of its sugar-free drinks, which have met with declining demand.

However, with a mature market and sales volume declining slightly, it is unlikely PepsiCo will see long-term revenue growth anywhere near the double digits expected this year. It also remains to be seen how much the company can increase costs before seeing a more meaningful exodus to cheaper no-name alternatives.

While slowing growth will likely tamp down share prices, conservative investors can count on stability. The company has an impressive A+ debt rating from S&P, putting it firmly in the investment-grade category.

The dividend stock is forming a cup base with 196.88 buy point, per MarketSmith pattern recognition. The relative strength line, however, remains largely in a downtrend.

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