My Only Dividend Buy This October Has Raised Its Payout Every Year for Decades

I added to my PepsiCo (NASDAQ:PEP | PEP Price Prediction) position again this month, and I keep adding every time the price slips. The stock trades at $125.71, down 9.75% year to date and close to its 52-week low of $124.22. Meanwhile, the dividend check keeps getting bigger.

PepsiCo sells Lay’s, Doritos, Gatorade and Pepsi to people who buy them every week, in good economies and bad ones. Its international business alone “is going to cross $40 billion in this year,” according to the chief executive. I can hold that kind of habit-driven demand for decades.

Three Reasons I Keep Adding

1. The business keeps producing cash. Second-quarter revenue reached $24.18B, up 6.4% YoY, and the quarter marked the company’s 4th consecutive EPS beat. On the July call, management said, “We’ve grown global volumes, 3% in foods and 2% in beverages. That’s the fastest growth in volumes since 2022.” In 2025, PepsiCo generated $12.087 billion in operating cash flow.

2. The dividend grows and remains covered. The company raised its annualized payout 4% from $5.69 to $5.92. That marked its 54th consecutive annual dividend per share increase. The quarterly payment was $0.13 in March 1999. Today it is $1.48. In 2025, PepsiCo paid $7.638 billion in dividends. It funded that from operating cash flow of $12.087 billion after $4.415 billion in capital spending. Management expects free cash flow conversion of at least 80% of core net income this year, and interest coverage stands at 12.03x.

3. The valuation sits below its peers. PepsiCo trades at 15x forward earnings with a 4.57% dividend yield. For an income investor, that means a well-funded payout at a lower multiple than its peers.

Why My Money Skips Its Two Biggest Rivals

Coca-Cola (NYSE:KO) runs a higher-margin model, with a 34.9% operating margin. Still, it yields 2.43% and trades at 25x forward earnings. Mondelez International (NASDAQ:MDLZ) yields 3.44% at 18x forward earnings. PepsiCo gives me more income per dollar invested at a cheaper multiple than either one. That gap is why I keep putting new money into PepsiCo.

One Risk That Could Change My Mind

North American snacks are the weak spot. PepsiCo Foods North America revenue fell 2% in the second quarter, and core operating margin narrowed 40 bps. The chief financial officer warned that full-year EPS “may be towards the low end of the EPS range.” Leverage adds pressure, with debt/equity at 2.45 and net debt/EBITDA at 2.31.

A 54-year streak shows how committed management is to the dividend. It guarantees nothing. I would stop buying if cash conversion fell well short of the 80% target while North American snacks kept shrinking. That combination would mean the dividend was growing faster than the business behind it. So far, international growth is making up the difference. Management also says “a category that was negative in volume now is positive in volume.” Fifty-plus years of raises puts PepsiCo in the Dividend Kings club, and we ranked our ten favorites at today’s valuations in a free report here.

What Keeps Me Buying From Here

PepsiCo plans about $8.9B in total cash returns to shareholders in 2026. It also has a new $10B buyback authorization that runs through February 28, 2030. A falling share price and a rising dividend let me buy more income with each dollar. I plan to keep reinvesting those quarterly checks for years to come.

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