PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products, as well as distributes alcoholic beverages under Hard MTN Dew brand. The company offers its products primarily under the Lay's, Doritos, Fritos, Tostitos, BaiCaoWei, Cheetos, Cap'n Crunch, Life, Pearl Milling Company, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, Rice-A-Roni, Aquafina, Bubly, Emperador, Diet Mountain Dew, Diet Pepsi, Gatorade Zero, Crush, Propel, Dr Pepper, Schweppes, Marias Gamesa, Ruffles, Sabritas, Saladitas, Tostitos, 7UP, Diet 7UP, H2oh!, Manzanita Sol, Mirinda, Pepsi Black, Pepsi Max, San Carlos, Toddy, Walkers, Chipsy, Kurkure, Sasko, Spekko, White Star, Smith's, Sting, SodaStream, Lubimyj Sad, Agusha, Chudo, Domik v Derevne, Lipton, and other brands. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is based in Purchase, New York.

PepsiCo looks like a high-quality but not cheap defensive business: profitability and returns are noticeably above the industry, but the valuation already reflects much of these advantages. P/E at the sector median level looks reasonable, but P/S, P/B, and P/FCF are materially above industry benchmarks, which limits upside from re-rating. At the same time, the multiples have generally declined in recent periods from higher levels, indicating some cooling in the valuation after the previous premium. The company’s strength lies in steadily improving margins: net, operating, and gross margins are above the industry and have been improving year over year, which supports earnings quality. ROE, ROA, and ROI are also strong and rising, confirming efficient use of capital and assets. Revenue, operating profit, EBITDA, and net income have all grown in absolute terms, which is positive for the long-term outlook. The balance sheet, however, remains a point of sensitivity: debt/equity is high, long-term debt is substantial, and current and quick liquidity are below comfortable levels. This means the company generates strong cash flow and profit, but financial flexibility is constrained by its debt burden. The dividend yield of around 1% looks stable, but it is not a strong driver of revaluation. Overall, the fundamentals support a premium valuation versus the sector, but not strongly enough to justify aggressive upside in the target price. For an investor, this is more a story of quality and resilience than of deeply undervalued potential. Therefore, a moderate conservative downward adjustment is appropriate, reflecting high multiples and debt risks despite the strong operating profile.

PepsiCo, Inc.

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Сильный индекс, значительно упал. Оптимистичный взгляд на свои позиции резко сменился на неуверенность.

Strong index, significantly down. An optimistic view of his position suddenly changed to uncertainty.

Сильный индекс, значительно упал. Рынок не поддерживает быков.

Strong index, significantly down. The market does not support the bulls.

Сильный индекс, значительно вырос. Рынок на стороне медведей.

Strong index, significantly up. The market is on the bears' side.

Сильный индекс, без изменений. Отток средств из лонгов на высоком уровне.

Strong index, flat. Outflow of funds from longs at a high level.

Сильный индекс, без изменений. Приток средств в шорты на высоком уровне.

Strong index, flat. Inflow of funds into shorts at a high level.

PepsiCo has strong margins and profitability, but its high P/S, P/B, and P/FCF valuation, along with significant debt, limits upside potential.

Key Points
Coca-Cola has been a reliable dividend stock for decades.
Its scale, diversification, and moat will drive its stock even higher.
Coca-Cola (NYSE: KO) is a classic dividend stock for income investors. The world's largest beverage company has raised its dividend annually for 64 consecutive years, putting it in the elite club of Dividend Kings, which have maintained that streak for at least 50 years.
If you had invested $200 into Coca-Cola's stock each month for the past 10 years, your principal would have grown from $24,000 to nearly $37,800 and paid out over $3,800 in cumulative dividends. You would also have an annualized yield on cost (based on your average purchase price) of 3.5%, compared to its current forward dividend yield of 2.3%.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Will it replicate those gains over the next decade?
Past performance never guarantees future gains, but Coca-Cola's scale, diversification, and wide moat suggest it can deliver similar returns over the next decade. In addition to its flagship sodas, it sells bottled water, fruit juices, teas, energy drinks, sports drinks, coffee, and even alcoholic beverages. It's also refreshing its sodas with smaller serving sizes, new flavors, and healthier options to attract new customers, even as soda consumption declines.
Coca-Cola only sells the concentrates and syrups for its drinks to its bottling partners, which produce and distribute the finished drinks. That asset-light model enables it to generate ample cash for dividends and operate at higher margins than PepsiCo (NASDAQ: PEP), which bottles its own drinks and sells lower-margin packaged foods. Therefore, Coca-Cola should remain a reliable evergreen stock for income-oriented investors for the foreseeable future.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 19, 2026.
Leo Sun has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If You Invest $200 a Month in Coca-Cola (KO) Stock, Here's the Dividend Income It Could Generate Over 10 Years.

Key Points
These stocks are all trading down in 2026 while paying dividend yields between roughly 3.6% and 7.6%.
PepsiCo and Hershey offer turnaround potential, while General Mills appeals to income-focused, patient investors.
Clorox’s cash flow concerns and Kraft Heinz’s debt make dividend sustainability a key risk.
Grocery store stocks have had a choppy year. Tariff pressure, shoppers trading down to store brands, and years of underinvestment at some companies have pushed several big consumer goods names down double digits in 2026, even as the broader market sits near records.
A falling stock isn't always a cheap business; sometimes it's cheap because it deserves to be. A few of these names are paying you a real dividend to find out which kind of cheap this is, and patient investors who can hold through some uncomfortable years could come out ahead.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Here are five consumer-facing stocks trading near 52-week lows, each dealing with its own version of the slump, and why I think the dividend makes the wait worth it.
1. PepsiCo: An activist is forcing the change it needed anyway
PepsiCo (NASDAQ: PEP) trades around $129, near its 52-week low of $123.47 and down sharply from a high above $171. The dividend yields roughly 4.6% and has been raised for 54 straight years, making it a Dividend King, a company that has grown its dividend payment annually for at least 50 consecutive years.
What changed this year: Elliott Management took a $4 billion stake and pushed PepsiCo into a formal agreement to cut its U.S. product lineup by roughly 20%, lower prices on core brands, and overhaul its North American supply chain. I see this less as weakness and more as outside pressure forcing moves management should have made years ago. If these cuts pay off, the next five years should see some juicy solid reversal in the stock price.
2. Hershey: Cocoa is back!
Hershey (NYSE: HSY) stock sits around $169, off its 52-week low of $156, yielding about 3.6%. Cocoa prices have fallen from last year's peak, and Hershey is using the relief to bring Reese's and Hershey's bars back to their original recipes after trimming cocoa content during the spike, per News Nation. Management guides to 30%-35% adjusted earnings growth this year, among the boldest forecasts in food, per the Wall Street Journal. If earnings can turn around with cocoa prices being more manageable, this stock is a solid dividend buy.
3. General Mills: A 127-year streak with no cuts
General Mills' (NYSE: GIS) share price has fallen around 30% in 2026 and sits near its 52-week low of $31.18, pushing the yield above 7.5%. The company and its predecessor have paid an uninterrupted dividend for 127 years, since 1898, and have never cut it, even though there have been multi-year stretches without a raise. Volume has been soft as shoppers trade down, but management says fiscal 2027 shifts focus to real product innovation, think protein and fiber additions, rather than just defending price.
Here's why I'd personally still buy and hold it five years out: a company that didn't cut its dividend through the Great Depression, two world wars, and every recession probably isn't going to blink because people are buying more store-brand cereal right now.
4. Clorox: A Dividend King with a cash flow problem worth watching
Clorox (NYSE: CLX) trades around $86, well off its 52-week high of $128.90, yielding close to 6%. Clorox is about to raise its dividend for a 50th straight year, officially qualifying as a Dividend King. The honest risk: Clorox paid out $452 million in dividends over the nine months ended March 31, but only generated $161 million in free cash flow in that same stretch, per its own cash flow statement. Some of that gap is a one-time hit, roughly $476 million went toward buying out Procter & Gamble's remaining stake in their Glad joint venture, per S&P Global, and it is not an ongoing cost. Still, I'd want to see that cushion rebuild before assuming the streak protects you no matter what.
5. Kraft Heinz: A turnaround before the turnaround
Kraft Heinz (NYSE: KHC) is the riskiest name here, yielding over 7%. The company announced a split into two companies in 2025, then paused it in February to redirect $700 million into brand reinvestment under new CEO Steve Cahillane, an admission its first plan wasn't the fix. I'd treat this as the smallest position here until sales trends turn. Although its dividend yield of around 7% is appealing, I would buy small here because of its high debt and history of dividend cuts.
Should you buy stock in PepsiCo right now?
Before you buy stock in PepsiCo, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PepsiCo wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 18, 2026.
Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hershey. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.

5 Dividend Stocks Trading Near 52-Week Lows That I'd Hold for the Next 5 Years.

Key Points
Dividend stocks are great options for total returns, and for downside protection in a portfolio.
Kraft Heinz has struggled, but it has a 7.1% yield and may be starting to turn the corner.
PepsiCo is at a 52-week low, but it has a high yield and a 54-year history of increasing its dividend.
Dividend stocks are some of the best investments you can own to brace your portfolio for a market downturn. That's not to say a market downturn is imminent, but conditions are here that certainly could lead to a correction or bear market. When it does happen -- and it will, it always does -- you need to be prepared in advance.
There is no better way to balance your portfolio than with good dividend stocks. That's not just because they are typically value stocks, which outperform in downturns. They also provide the added benefit of passive income that can boost your total return when reinvested back in the stock.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
In both the 1970s and 2000s, two periods marred by sluggish returns, reinvested dividends accounted for most of the S&P 500's returns in those decades. Here are two high-yielding dividend stocks that will deliver strong passive income and provide downside protection.
1. Kraft Heinz -- 7.13% yield
Kraft Heinz (NYSE: KHC) makes all kinds of food products that are in most of our cupboards, like Heinz ketchup and Kraft macaroni and cheese. These are consumer staples that people will buy no matter what the economy is doing.
Kraft Heinz's struggles have been well documented over the years as the stock price has posted dreadful numbers. It's down 13% on an average annualized basis over the past 10 years. It is one of the few Warren Buffett and Berkshire Hathaway investments that did not pan out.
Kraft Heinz pays out a huge 7.13% yield, and it has maintained its $0.40 per share dividend for eight years now. The stock price has plummeted over that stretch and is down 8% year to date, but there is reason for hope.
The company had planned to split last year, but now it is focused on turning things around. New Berkshire CEO Greg Abel was going to exit the position in Kraft Heinz, but changed course after Kraft Heinz called off the split, so Berkshire still owns the stock.
The new leadership at Kraft Heinz has restructured and is investing some $700 million in sales, marketing, and research and development to return the company to sustainable profitable growth. Next year, analysts expect modest revenue and earnings growth.
You would not be investing in Kraft Heinz stock for the capital appreciation. You'd do it for the high-yield dividend and the potential for decent total returns in the event the market corrects.
2. PepsiCo -- 4.67% yield
While Kraft Heinz is a bit more of a risk, PepsiCo (NASDAQ: PEP) is about as solid a dividend stock as you can find. The beverage maker is a Dividend King, having raised its dividend annually for 54 years in a row.
PepsiCo stock is down 11% this year. It has struggled over the past five years, with an average annualized return of -4% or -1% with the dividend reinvested. That's why the yield has climbed to a high 4.67% -- because the yield is the dividend per share divided by the stock price. When the stock price drops, the yield goes up.
The concern is whether a stock is a dividend trap -- where the yield is high, but unsustainable due to the company's struggles. That is not the case with PepsiCo. It has a long track record of increasing its dividend.
It's also trading near a 52-week low, and it's cheap. The stock jumped a bit after its third-quarter earnings were released on Oct. 8, as the company posted revenue and earnings growth and beat estimates. It did lower its guidance for earnings for the fiscal year, but the company is looking to reduce costs to improve margins, grow its stagnant U.S. business, and fuel its surging international business.
PepsiCo stock should slowly start to move off this 52-week low and maintain its reliable dividend.
Neither one of these stocks will generate massive returns, but what they will do is provide you with some portfolio balance. You get significant dividend income, and if the market turns south, both should provide downside protection, particularly with their total returns.
While these stocks have struggled over the past five years, during the last major downturn in 2022, they both destroyed the S&P 500. Kraft Heinz was up 18% for the year, while PepsiCo was up 7% on a total return basis. That's the major benefit that these stocks provide.
Should you buy stock in Kraft Heinz right now?
Before you buy stock in Kraft Heinz, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kraft Heinz wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,579!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,359,789!*
Now, it’s worth noting Stock Advisor’s total average return is 934% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 15, 2026.
Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.

2 Top Dividend Stocks Yielding 4% or More to Buy Right Now for Passive Income

The two have been competing in the same industry for decades.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
*Stock prices used were the afternoon prices of Oct. 10, 2026. The video was published on Oct. 12, 2026.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,795!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,390,634!*
Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 14, 2026.
Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Better Buy: PepsiCo or Coca-Cola?

Key Points
PepsiCo's roughly 4.7% yield and 54-year streak of dividend increases make it a compelling dividend stock.
Coca-Cola raised its full-year adjusted earnings guidance, while PepsiCo lowered its outlook over rising costs.
Analysts expect Coca-Cola to grow earnings at a faster rate than PepsiCo over the long term, supporting a higher valuation.
PepsiCo (NASDAQ: PEP) and Coca-Cola (NYSE: KO) are both Dividend Kings -- a label for companies that have raised their annual dividend for at least 50 consecutive years -- of keen interest to investors. PepsiCo offers a higher dividend yield, but Coca-Cola is delivering stronger growth amid inflation and interest rates that are squeezing consumers' wallets.
Coca-Cola, the maker of Diet Coke and Sprite, among others, has raised its dividend for 64 straight years. PepsiCo, home of Lay's, Cheetos, Gatorade, and more, has a 54-year dividend growth streak.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Coca-Cola trades at about 26 times trailing earnings, compared to about 16 for PepsiCo. PepsiCo could be worth buying now for its high yield, but the valuation gap is justified considering Coca-Cola's stronger sales growth in a challenging economy.
PepsiCo lowered fourth-quarter earnings guidance because of rising costs
PepsiCo's forward dividend yield is about 4.7%, as of Oct. 8, compared to 2.4% for Coca-Cola. PepsiCo's dividend has also grown faster over the last five years, growing about 7% a year vs. Coke's 4.5%.
Even with Pepsico reporting sluggish sales growth this year, the payout looks sustainable. PepsiCo raised its dividend by 4% this year and paid out 75% of its trailing-12-month free cash flow. With PepsiCo reporting record free cash flow of over $10 billion over the past year, the dividend should continue to grow.
However, the stock is trading at a lower P/E multiple for a reason. The company lowered guidance for fourth-quarter core constant currency earnings per share, now expected to be up 1%-2% year over year -- down from previous guidance of 4%-6%. This reflects continued cost inflation that is hurting margins.
Coca-Cola is growing faster than PepsiCo in a challenging economy
Coca-Cola stock is up 26% year-to-date as I write this, outperforming PepsiCo's 12% decline. Coke deserves to trade at a higher P/E due to stronger sales volume growth, hitting 3% year over year in Q1 2026 and accelerating to 5% in Q2 -- its fastest growth in 17 years.
After strong Q2 sales, management raised its full-year adjusted earnings growth outlook to 9%-10% year over year.
Coca-Cola's long-term outlook is for organic revenue growth to remain in the 4%-6% range, outpacing the beverage industry. Given Coke's record of consistent volume sales increases over the last 50 years, excluding the pandemic, investors have confidence in that outlook, which supports a higher valuation for the stock.
Wall Street analysts expect Coca-Cola to grow earnings at an annualized rate of 7.4% over the long term, compared to 4.8% for Pepsico. Higher earnings growth and healthy volume growth are why Coca-Cola deserves to trade at a premium over Pepsico. Coca-Cola is the stock I would buy right now.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,795!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,390,634!*
Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 13, 2026.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Coca-Cola vs. PepsiCo: Which Dividend King Deserves a Premium Valuation Right Now?

Key Points
The Shiller CAPE ratio hasn't been this high since the dot-com era.
I'm building more defensive ballast in my portfolio by investing in Dividend Kings.
Abbott, P&G, and PepsiCo all have durable characteristics with solid long-term upside potential.
The stock market is flashing a warning sign. The Shiller CAPE Ratio is approaching 42, its second-highest reading in 150 years (hit right before the dot-com crash). However, instead of selling stocks and going into cash, I've been buying companies built to survive moments like these.
Three of my recent purchases were Abbott (NYSE:ABT), PepsiCo (NASDAQ:PEP), and Procter & Gamble (NYSE:PG). All three are Dividend Kings (companies with 50 or more years of annual dividend increases) and top holdings of the Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD). Here's why I think they're ideal stocks to buy at a time when the market is historically overvalued.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
The warning signal
The Shiller CAPE ratio (cyclically adjusted price-to-earnings ratio) measures whether the stock market is overvalued or undervalued relative to its historical inflation-adjusted earnings record. It just hit its highest level since the dot-com era. That's a bad omen as the S&P 500 (SNPINDEX:^GSPC) lost nearly half its value over the next two-and-a-half years.
Another notable peak came in Oct. 2021 when the Shiller CAPE ratio hit 38.6. That preceded the 2022 rate-driven bear market in stocks.
These three Kings stand out
I'm not predicting that the stock market will crash. However, with the Federal Reserve recently hiking interest rates for the first time in three years, I'm becoming more defensive because stocks have historically declined during rate-hike cycles, as we saw in 2022. Still, I want to maintain upside in the equity market because it has historically recovered quickly following a Fed-induced decline.
That's why I'm adding some defensive ballast to my portfolio by investing in high-quality dividend stocks with durable revenues and strong balance sheets. Abbott, P&G, and PepsiCo all passed my quality screenings.
Abbott owns a diversified portfolio of high-quality healthcare products, including diagnostics, medical devices, nutritionals, and branded generic medicines. Demand for these products tends to be highly resilient and steadily rising. That's evident in its dividend, which Abbott has raised for 54 straight years. The company currently offers an attractive 2.5% yield and trades at a very reasonable 18.5x forward earnings (cheaper than the S&P 500's 19.5x forward earnings multiple). I think there's a clear case that Abbott's stock could more than double over the next decade, given its low valuation and solid earnings growth profile. It has the exact profile I'm seeking. A durable business, attractive and growing dividend, and compelling upside potential.
Procter & Gamble stood out for its collection of resilient household brands, which includes Bounty, Charmin, and Gillette. It's currently facing near-term pricing headwinds that have weighed on its valuation. As a result, it trades at less than 22 times forward earnings, near its lowest valuation over the past five years. That's why it currently offers a nearly 3% dividend yield. P&G has increased its dividend for 70 straight years, showcasing the durability of its business over the decades. I expect P&G to eventually get back to the mid-to-high single-digit annual core earnings growth rate it's targeting over the long term as its margins improve. Add in its strong cash flows and fortress balance sheet, and P&G offers ballast in a more turbulent market, with solid long-term upside potential.
Finally, PepsiCo also benefits from durable demand for its iconic portfolio of beverages and snacks. That has supported 54 years of dividend increases. Like P&G, it's currently facing headwinds that have weighed on its valuation (15x forward earnings). That's why it currently offers a dividend yield of more than 4.5%. That high starting yield provides a meaningful income return.
Meanwhile, PepsiCo doesn't need to grow very fast to deliver strong total returns. If the company can return to its long-term growth ambitions of high-single-digit core earnings-per-share growth, it could deliver double-digit total annual returns without any multiple expansion.
Independent validation
I decided to add Abbott and P&G to my portfolio and increase my allocation to PepsiCo based on the individual merits of each company. However, I couldn't help but notice that they're all among the top holdings of the leading dividend-focused ETF, the Schwab U.S. Dividend Equity ETF. P&G is its third-largest holding (4.3% allocation), Abbott ranks 11th (3.8%), and Pepsi is 12th (3.8%).
The index this ETF tracks (Dow Jones U.S. Dividend 100 Index) screens dividend stocks based on several quality characteristics, including financial strength, dividend yield, and five-year dividend growth rate. Their high allocations in the fund show their relative strength among high-yielding dividend stocks. It's further evidence that they're high-quality holdings. As an investor in SCHD, I'm happy to increase my allocation to some of its top holdings, given its strong historical track record.
I'm taking the warning signs seriously but not panicking
A historically high CAPE ratio, combined with a Fed rate hike cycle, is a reason to be cautious these days. That's why I'm adding more defensive ballast to my portfolio by investing in elite dividend stocks like Abbott, P&G, and PepsiCo. They should be less volatile if there's a market storm, while still delivering plenty of offensive upside.
Should you buy stock in Abbott Laboratories right now?
Before you buy stock in Abbott Laboratories, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Abbott Laboratories wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $380,795!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,390,634!*
Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 13, 2026.
Matt DiLallo has positions in Abbott Laboratories, PepsiCo, Procter & Gamble, and Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool has a disclosure policy.

The Market Is Flashing Warning Signals Not Seen in Years. Here’s Why I Just Bought 3 of SCHD’s Dividend Kings.

For Immediate Release
Chicago, IL – October 12, 2026 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan JPM, Citigroup C, Pepsi PEP, Micron MU and Nike NKE.
Estimates Keep Rising as Q3 Earnings Session Takes Center Stage
The Q3 earnings season takes center stage this week when JPMorgan, Citigroup and others report September-quarter results before the market's open on Tuesday, October 13th. This week's reporting docket, comprising 29 S&P 500 members, also includes companies outside the Finance sector, with bellwethers like Johnson & Johnson, Taiwan Semiconductor Company, and UnitedHealth also reporting quarterly results.
The expectation is that S&P 500 earnings will increase by +24.3% from the same period last year, the 8th straight quarter of double-digit earnings growth for the index.
The Tech sector remains a major growth contributor, but momentum is broad-based, with 15 of the 16 Zacks sectors on track for positive earnings growth in Q3. Importantly, the revisions trend remains positive and broad-based, highlighting a steadily improving outlook.
As noted earlier, the revisions trend has been positive, sustaining the favorable trend in place for almost a year. Estimates for Q3 increased after the quarter got underway, and we are seeing a similar trend at play for 2026 Q4 estimates.
This positive revision behavior is not new; it extends a tailwind that has been building for nearly a year. The positive revisions were at first concentrated in Technology and, more recently, Energy following Middle East supply disruptions. However, for 2026 Q4 and what we saw in Q3, constructive estimate revisions have broadened significantly, rising across 7 of the 16 Zacks sectors—including Aerospace, Construction, Industrials, Finance, and Transportation alongside Tech and Energy.
On the negative side, Q4 estimates remain under pressure for these 8 sectors – Conglomerates, Autos, Basic Materials, Consumer Staples, Consumer Discretionary, Medical, Business Services, and Retail.
It is important to note that estimates for full-year 2027 have also been similarly trending higher, which we show a little later in this note.
Sector Focus: Broad-Based Strength
Q3 earnings are expected to be above the year-earlier level for 15 of the 16 Zacks sectors, with 6 sectors expected to enjoy double-digit growth. The multi-industry Conglomerates sector is the only one expected to have lower earnings in Q3 relative to the same period last year (earnings decline of –35.1%).
The 6 sectors expected to enjoy double-digit earnings growth in Q3 are Aerospace (up +159.5%), Energy (+117.1%), Tech (+43.3%), Basic Materials (+29.7%), Transportation (+10.9%) and Industrial Products (+13.3%).
Q3 earnings growth for the S&P 500 index drops to +20.1% from +24.3% once the Energy sector's contribution is excluded from the index. Excluding the Tech sector, Q3 earnings growth for the rest of the index drops to +14.2%.
For the Finance sector, which dominates the reporting docket this week, Q3 earnings are expected to be up +3.3% from the same period last year on +6.3% higher revenues.
The Banks and Brokerages industry, which includes JPMorgan, Citigroup, Goldman Sachs, and others, is expected to post +2.5% earnings growth in Q3 on +9.7% higher revenues.
The sharp rise in long-term Treasury yields during Q3 has been an overhang on bank and broker stocks lately. Rising yields don't just cause paper losses on balance sheet holdings of available-for-sale bonds, as they also pressure net interest margins through surging deposit betas and have negative effects on credit demand and quality. The unfavorable interest rate backdrop has clouded the outlook for deal flow, with a number of high-profile IPOs getting delayed as a result.
Q3 Earnings Season Scorecard
The Q3 earnings season is not officially getting underway with this week's results from JPMorgan, Citigroup, and others. Officially, the Q3 reporting cycle began with recent results from Pepsi, Micron, Nike, and others.
The Nike, Micron, and other reports were for these companies' fiscal quarters ending in August, which count as part of the September-quarter tally. Including the Nike and Micron reports, we now have such Q3 results from 19 S&P 500 members. With another 29 index members reporting results this week, including the aforementioned banks, we will have seen results from 48 S&P 500 members by the end of this week.
Total Q3 earnings for the 19 S&P 500 members that have reported results already are up +150.9% from the same period last year on +27% higher revenues, with 78.9% beating EPS estimates and 73.7% beating revenue estimates.
The very strong earnings and revenue growth pace for this group of 19 S&P 500 members is mostly due to Micron, whose Q3 earnings increased +1075.7% from the year-earlier level. Excluding the Micron contribution, Q3 earnings for the remaining 18 index members that have reported would be up +9.4%.
The Earnings Big Picture
As we noted earlier, estimates for full-year 2027areexperiencing the same positive revisions trend that we noted earlier in the context of 2026 Q4.
For a detailed view of the evolving earnings picture, please check out our weekly Earnings Trends report here >>>> Banks Under Pressure from Spiking Yields Ahead of Q3 Results
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Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
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Free: See Our Top Stock And 4 Runners Up
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NIKE, Inc. (NKE) : Free Stock Analysis Report

JPMorgan, Citigroup, Pepsi, Micron and Nike are part of Zacks Earnings Preview

Key Points
Walmart and PepsiCo are Dividend Kings with more than 50 years of annual dividend increases.
Realty Income has outperformed the S&P 500 in 11 of its 13 corrections since the REIT's 1994 market listing.
Verizon has increased its high-yielding dividend every year for two decades.
The stock market can get choppy at times. In April 2025, the S&P 500 fell more than 10% over three days after President Trump announced his "Liberation Day" tariffs, one of the fastest corrections in recent history. By the time the market finally calmed down and selling subsided, the S&P 500 was down almost 19% from its February peak, just shy of an official bear market. However, almost as quickly as it happened, the market reversed much of its decline a week later after the President announced a 90-day tariff pause, and reclaimed almost all its losses within a month.
The thing about choppy markets like that is that no one can predict them in advance. What we can do is prepare for them by owning businesses built to weather the market's inevitable storms. Durable characteristics include resilient earnings throughout the economic cycle, a long track record of dividend growth, and demonstrated pricing power.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Walmart (NASDAQ: WMT), Realty Income (NYSE: O), PepsiCo (NASDAQ: PEP), and Verizon (NYSE: VZ) each have these key traits. That makes them steady stocks to own before the market gets choppy.
Walmart
Walmart is one of the world's largest retailers, with more than 10,900 stores in 19 countries and annual sales of $713 billion. That scale gives Walmart pricing power and the leverage to press vendors for lower prices. The company focuses on helping consumers save money, and primarily sells essential products such as groceries and household goods. The company's focus on delivering value to consumers drives more resilient sales during economic downturns as they trade down from higher-cost retailers.
The retailer has increased its dividend for 53 straight years, qualifying it as an elite Dividend King, a company with 50 or more years of annual dividend increases. That multi-decade dividend growth streak includes several recessions, showcasing the resilience of its earnings.
We saw Walmart's steadiness on full display during 2025's choppy market period. While the S&P 500 was down over 5% by the end of April, Walmart's stock was up over 7%.
Realty Income
Realty Income is one of the world's largest real estate investment trusts (REITs). It owns a diversified portfolio of retail, industrial, gaming, data center, and other properties, secured by long-term net leases with many of the world's leading companies (including Walmart, a top-20 tenant at 0.9% of its annual base rent). The company's leases provide it with very durable income, as most of its rent comes from tenants in industries resilient to economic downturns. Meanwhile, most of its leases feature annual rental escalation clauses (either fixed rate increases or those tied to inflation).
The REIT's stable, steadily rising rental income supports its growing monthly dividend. It has increased its dividend 136 times since its public market listing in 1994 (more than 31 straight years). Realty Income's strong financial profile also enables it to invest billions of dollars annually in new income-generating real estate.
Realty Income has proven to be very resilient in choppy markets. The REIT has outperformed the S&P 500 in 11 of the 13 drawdowns of 10% or more since its 1994 listing. Its stock has fallen by an average of 2.6% compared to the S&P 500's average decline of 22.6% during these corrections.
PepsiCo
PepsiCo is a global beverage and snacking leader with about $95 billion in annual sales. It owns leading brands, including Pepsi, Mountain Dew, Quaker, and Doritos. While the company is currently facing demand and cost headwinds, it still expects to deliver low-single-digit organic revenue and earnings-per-share growth this year. Its ability to deliver volume growth while pushing through price increases demonstrates its pricing power.
Like Walmart, PepsiCo is a Dividend King. It extended its streak to 54 straight years in 2026. With a rock-solid balance sheet and its business generating strong, growing free cash flow, PepsiCo can continue to grow its dividend during more challenging times. That's evident in its current headwinds, as it hiked its dividend by another 4% in 2026.
PepsiCo stock tends to be much less volatile than the S&P 500. It has a three-year beta of less than 0.5, compared with the S&P's 1.0. This implies that if the S&P 500 drops 10%, PepsiCo stock would typically fall only 5%.
Verizon
Verizon is a leading mobile and broadband company. It generates recurring revenue that tends to be highly durable because wireless and internet services are essential for most consumers. While it's easier to switch providers now than it was in the past, Verizon's high-quality network and scale help reduce customer churn.
The company has raised its dividend for 20 straight years. It generates significant free cash flow after investing in network expansion, more than sufficient to cover its dividend. That provides it with excess cash to repurchase shares and maintain its solid balance sheet.
Verizon offers a high dividend yield (nearly 7%). While that high yield reflects its slower growth and higher risk profile due to competition, it also provides investors with a meaningful real return in choppy markets.
Save havens when the market gets choppy
There's no telling when the next market downturn will occur. That's why it's smart to be prepared for choppy markets before they arrive by ensuring your portfolio includes steadier investments like Walmart, Realty Income, PepsiCo, and Verizon that can provide ballast during these more turbulent times. While they aren't risk-free investments, they should help lower your portfolio's overall volatility without giving up too much long-term upside potential.
Should you buy stock in Walmart right now?
Before you buy stock in Walmart, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Walmart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $379,123!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,408,822!*
Now, it’s worth noting Stock Advisor’s total average return is 950% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 11, 2026.
Matt DiLallo has positions in PepsiCo, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

How to Beat a Choppy Market With 4 Steady Stocks

Key Points
The two main GLP-1 manufacturers are poised to gain the most.
Some snack makers are prepared to weather the storm, while others are suffering.
Occasionally, an innovation comes along that causes consumers to significantly alter their habits or behavior. When that happens, some companies will benefit, while others will suffer. And when such an innovation is a major one, the impact on various companies and sectors can be pronounced.
We're seeing that right now with the growth of GLP-1 drugs like Wegovy and Zepbound, which are dramatically altering the way people eat because of their powerful ability to reduce appetite.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
And the use of these drugs is growing rapidly. According to polling firm Gallup, Americans' use of GLP-1 injectables for weight loss has nearly quadrupled since 2024. The percentage of U.S. adults taking these weight loss drugs has risen to 11% this year, from 3% just two years ago. And 15% of U.S. adults report having used the medicine at some point.
The drugs are effective at treating obesity. The adult obesity rate in the U.S. has fallen from 39.9% in 2022 to 36.8% in 2026.
That effectiveness means more people will turn to the drugs for weight loss. And that's exactly what market watchers are forecasting. J.P. Morgan Global Research forecasts that some 25 million Americans will be on GLP-1 treatment by 2030, up from about 10 million last year. That includes people taking the drugs for type 2 diabetes, but the effects on appetite are the same.
That's just the U.S. market. Penetration of GLP-1 drugs globally is lower, but it too is expected to balloon in the coming years, especially as the introduction of generic drugs and oral pills grows.
Snack food sales are suffering due to growing GLP-1 use
At the same time, users of the drugs are spending less on groceries and snacks. A December 2025 study in the Journal of Marketing Research looked at purchases by GLP-1-using households and found that, within six months of starting a GLP-1 medication, grocery spending by these households fell by 5.3% on average, and 8% among higher-income households.
Purchases of ultra-processed and calorie-dense foods saw the largest declines, with spending on savory snacks dropping by about 10%, along with similarly large decreases in spending on sweets, baked goods, and cookies.
That decrease in spending is expected to accelerate. "GLP-1 treatments are projected to lead to an annual revenue reduction of $30 billion–$55 billion by 2030–2034 for the food and beverage industry, with consumers taking in 21% fewer calories and spending 31% less on groceries," according to J.P. Morgan.
So, which companies collect and which ones pay as the use of GLP-1 drugs continues to spread around the globe?
Well, the biggest beneficiaries will likely be the makers of these drugs. Eli Lilly (NYSE: LLY) makes Mounjaro and Zepbound, with combined sales of $36.5 billion in 2025. In fact, the GLP-1 drug in each of those brand names, tirzepatide, is now the world's best-selling drug.
Competitor Novo Nordisk (NYSE: NVO) makes Wegovy and Ozempic, which together generated $31 billion in revenue last year. The surge in demand for GLP-1 drugs has made Novo Nordisk Denmark's largest company, with a market cap of about one-third of the country's economic output.
Lilly's share price has climbed more than 400% during the past five years, primarily because, at least for now, it seems to be winning the race to become the world's largest GLP-1 provider. Novo's shares are down during that time, but only because investors are choosing Lilly over the Danish firm. In fact, Novo's revenue more than doubled between 2021 and 2025.
Some snack companies will suffer, but others are adapting
And how about snack companies? Well, so far, Coca-Cola (NYSE: KO) is holding up well. While studies show that people using GLP-1 drugs consume less full-sugar soda, some 68% of the company's portfolio consists of low- or no-calorie options.
The situation is similar for Monster Beverage (NASDAQ: MNST), as energy drinks seem to be less impacted by GLP-1 use. Coca-Cola shares are up 34% over the past year, and Monster's share price has climbed 27%.
But some snack makers are already feeling the squeeze from GLP-1s. Shares of PepsiCo (NASDAQ: PEP) are down 12% during the past year. The company's major snack brands are highly exposed to consumers cutting back on processed snacks. Lay's is considered one of the products most exposed to the shift in calorie intake due to GLP-1s.
Shares of snack maker Mondelez International (NASDAQ: MDLZ) are little changed during the past year. So far, the maker of Oreo and Chips Ahoy! cookies hasn't felt a significant hit from GLP-1 drugs, but that may be because 75% of its sales are outside the U.S., with a big chunk in emerging markets. GLP-1 drugs have much lower penetration in those countries, but they, too, will likely adopt these weight-loss products eventually. It seems that investors already sense that.
Hershey (NYSE: HSY) is down about 17% over the past year. So far, GLP-1 use has had a modest negative impact on the iconic candy manufacturer. Sales of its popular snacks have declined.
But there's a silver lining there, too: There's been a surge in demand for breath mints to combat GLP-1 side effects that include dry mouth and bad breath. So, the company is seeing growth in sales of Ice Breakers and Breath Savers.
One thing is certain: Sales of GLP-1 drugs look set to accelerate. So investors will need to watch the consequences for other industries and companies.
Should you buy stock in Eli Lilly right now?
Before you buy stock in Eli Lilly, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Eli Lilly wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $379,123!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,408,822!*
Now, it’s worth noting Stock Advisor’s total average return is 950% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 11, 2026.
Matthew Benjamin has positions in Novo Nordisk. The Motley Fool has positions in and recommends Eli Lilly, Hershey, Monster Beverage, and Novo Nordisk. The Motley Fool has a disclosure policy.

As GLP-1 Drugs Change How People Eat, Drugmakers Collect and Snack Makers Feel the Squeeze

Key Points
Coca-Cola is a Dividend King with a wide moat.
But its stock looks historically expensive, and its dividend yield isn’t impressive.
Coca-Cola (NYSE: KO), the world's largest beverage maker, is a classic dividend stock. It's raised its dividend annually for 64 straight years, making it a Dividend King that has maintained that streak for at least five decades. It pays a respectable forward yield of 2.5%.
But with the 10-Year Treasury yield at 5.3%, does it still make sense to invest in Coca-Cola's riskier, lower-yielding stock? Let's review its strengths and weaknesses to decide.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
What are Coca-Cola's strengths?
Over the past few decades, Coca-Cola has diversified its portfolio to include more bottled water, teas, fruit juices, sports drinks, energy drinks, coffee, and even alcoholic beverages. It also refreshed its flagship sodas with new flavors, healthier versions, and smaller serving sizes.
Coca-Cola's expansion and diversification insulated it from the global slowdown in soda consumption. It also maintained an asset-light business model by only selling its syrups and concentrates to independent bottlers, which produced and distributed the finished drinks.
That's why Coca-Cola generates higher gross margins than PepsiCo (NASDAQ: PEP), which bottles its own drinks and sells lower-margin packaged foods. Coca-Cola's streamlined business model is also better insulated from raw cost inflation and higher labor costs than PepsiCo.
That's also how Coca-Cola generates plenty of cash to cover its dividends. Over the past 12 months, it spent just 77% of its free cash flow (FCF) and 62% of its earnings per share (EPS) on its dividends. From 2025 to 2028, analysts expect its EPS to grow at a steady 7% CAGR. That growth should be driven by the expansion of its newer dairy, energy, and sugar-free drinks; the consolidation of its bottling network; and its AI-powered inventory optimization strategies.
What are Coca-Cola's weaknesses?
Over the past 12 months, Coca-Cola's stock has rallied more than 30%. Those gains were partly driven by the broader flight to safe-haven blue chip stocks.
But at $86 per share, Coca-Cola doesn't look cheap at 26 times this year's earnings. It also pays less than half the yield of the 10-Year Treasury, long-term CDs, and other fixed income investments. Therefore, its upside potential could be limited in this challenging market.
Coca-Cola also doesn't consistently beat the S&P 500 (SNPINDEX: ^GSPC). Over the past 10 years, Coca-Cola delivered a total return of 182% with reinvested dividends, underperforming the S&P 500's total return of 326%. Over the past 20 years, Coca-Cola's total return of 606% still trailed the S&P 500's total return of 739%. For long-term investors, it might be smarter to simply invest in Vanguard's S&P 500 ETF (NYSEMKT: VOO) instead of Coca-Cola.
Coca-Cola's business is built to withstand recessions, but tighter regulations on sugary drinks (such as "soda taxes") and on plastic packaging could drive its bottling partners to raise prices. Those price hikes could cap its sales and erode its defenses against cheaper competitors. New GLP-1 drugs and more health-conscious consumers could also create fiercer headwinds for its carbonated drinks, forcing Coca-Cola to aggressively invest in healthier beverages.
Is it the right time to buy Coca-Cola?
I own some shares of Coca-Cola, which account for 4.4% of my portfolio. I like the stock as a defensive long-term investment, but I wouldn't add more shares in this messy market. Coca-Cola's valuations were inflated by the buying spree in defensive stocks in response to rising inflation and the Iran war. But after the Fed raised its benchmark rates for the first time in three years in September, T-bills and CDs have become better places to park your cash.
Therefore, the market could revalue Coca-Cola at a lower multiple as more investors realize the stock isn't cheap and yields less than the 10-Year Treasury. That's why I'm reluctant to recommend Coca-Cola unless its stock pulls back or it significantly raises its dividend.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $361,650!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,437,517!*
Now, it’s worth noting Stock Advisor’s total average return is 936% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Leo Sun has positions in Coca-Cola. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.