2 Dividend Kings to Buy for 2023

NYSE: PEP | PepsiCo, Inc. News, Ratings, and Charts

PEP – Although inflation slowed in December, concerns of a recession weigh heavy on investors’ sentiments as the Fed plans to continue raising interest rates this year. Therefore, to hedge one’s portfolio against recession, investors could add PepsiCo (PEP) and Colgate-Palmolive (CL) to their portfolios due to their strong fundamentals and steady dividend payments. Read more….

The Federal Reserve’s seven interest rate hikes last year finally showed results, as the Consumer Price Index (CPI) for December came on par with analyst estimates, rising 6.5% year-over-year and declining 0.1% over the prior month.

Although inflation shows signs of cooling, the jobs market remains tight as the U.S. jobless claims for the week ended December 31, 2022, fell to their lowest level in three months.

Minutes from the Fed’s policy meeting in December showed that the central bank officials expect higher interest rates to remain this year until more progress is made on bringing inflation down to its long-term target of 2%. This has triggered fears of a recession.

When faced with market uncertainty, investors might prefer to add dividend stocks to their portfolios as they can provide a stable source of income and stability against market turbulence. Investors’ interest in dividend stocks is evident from the SPDR S&P Dividend ETF (SDY) 13.5% returns over the past three months. 

Amid this backdrop, it could be wise to buy fundamentally strong dividend stocks PepsiCo, Inc. (PEP) and Colgate-Palmolive Company (CL) to help cushion one’s portfolio against market turbulence.

PepsiCo, Inc. (PEP)

PEP manufactures, markets, distributes, and sells 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. 

Over the last three years, PEP’s dividend payouts have grown at a 6.1% CAGR. Its four-year average dividend yield is 2.78%, and its annual dividend of $4.60 per share translates to a 2.58% yield. It paid a quarterly dividend of $1.15 per share on January 6, 2023. PEP has grown its dividend for 51 consecutive years.

On September 14, 2022, ADM (ADM) and PEP announced a 7.5-year strategic commercial agreement to collaborate closely on projects that aim to expand regenerative agriculture. Chief Sustainability Officer at PEP, Jim Andrew, believes this partnership will help PEP reach almost one-third of its goal to reduce carbon emissions to 7 million acres by 2030.

PEP’s net revenue for the third quarter (ended September 3, 2022) increased 8.8% year-over-year to $21.97 billion. The company’s non-GAAP operating profit increased 10.9% year-over-year to $3.60 billion, while non-GAAP net income attributable to PEP increased 10% year-over-year to $2.73 billion. Also, its adjusted EPS increased 10% from the prior-year period to $1.97. 

Analysts expect PEP’s EPS and revenue for the quarter ending December 31, 2022, to increase 7.4% and 5.9% year-over-year to $1.64 and $26.75 billion, respectively. The company has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.

The stock has gained 9.5% over the past three months to close the last trading session at $178.05.  

PEP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.  

It is ranked #8 out of 36 stocks in the A-rated Beverages industry. It has an A grade for Quality and a B for Growth, Stability, and Sentiment. We have also given PEP grades for Value and Momentum. Get all PEP ratings here.

Colgate-Palmolive Company (CL)

CL manufactures and sells consumer products worldwide. The company operates through two segments, Oral, Personal, and Home Care; and Pet Nutrition.  

Over the last three years, CL’s dividend payouts have grown at a 2.8% CAGR. Its four-year average dividend yield is 2.35%, and its annual dividend of $1.88 per share translates to a 2.44% yield. It paid a quarterly dividend of $0.47 per share on November 15, 2022. CL’s dividends have grown for 60 consecutive years.

CL’s net sales for the fiscal third quarter (ended September 30, 2022) increased marginally year-over-year to $4.46 billion. Its total assets increased 2.6% year-over-year to $16.29 billion. Additionally, its EPS came in at $0.74.  

CL’s EPS for the quarter ending March 31, 2023, is expected to increase marginally year-over-year to $0.74. Its revenue for the quarter that ended December 31, 2022, is expected to increase 3.4% year-over-year to $4.55 billion. The stock has gained 11.7% over the past three months to close the last trading session at $77.13.  

CL’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. Within the Consumer Goods industry, it is ranked #5 out of 58 stocks. It has an A grade for Quality and a B for Stability. 

To see the additional ratings of CL for Growth, Value, Momentum, and Sentiment, click here.


PEP shares were trading at $175.93 per share on Thursday afternoon, down $2.12 (-1.19%). Year-to-date, PEP has declined -2.62%, versus a 3.96% rise in the benchmark S&P 500 index during the same period.


About the Author: Malaika Alphonsus


Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions. More...


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