3 Stocks to Buy Now That Offer Steady and Reliable Income

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

PEP – Rising inflation and lingering recession concerns have necessitated the need to add a defensive layer to one’s portfolio. Therefore, it could be wise to invest in fundamentally strong dividend-paying stocks PepsiCo (PEP), Costco Wholesale Corp. (COST), and Comcast Corp. (CMCSA) to generate a steady and reliable income stream. Read on….

The benchmark indexes are experiencing heightened volatility amid rising inflationary pressures and concerns of further aggressive interest rate hikes by the Federal Reserve. The CBOE Volatility Index, which gauges market volatility and sentiment, has jumped 18.9% over the past month.

The 10-year Treasury yield has jumped to its highest level since 2011 because of the Federal Reserve’s hawkish monetary policy stance. So far, the efforts to curb the stubbornly high inflation seem to have yielded no result as it still hovers near the 40-year high.

The Fed remains adamant about raising interest rates until it reaches its target levels. And economists believe this would push the economy into a recession by the end of the year. Since the Fed’s hawkish stance continues to induce pressure on the stock market, investors should consider adding dividend-paying stocks to cushion their portfolios with steady income streams.

Therefore, it could be wise to add fundamentally strong stocks PepsiCo, Inc. (PEP), Costco Wholesale Corporation (COST), and Comcast Corporation (CMCSA), which offer steady and reliable income streams through dividends.

PepsiCo, Inc. (PEP)

PEP is a global food and beverage giant with a broad portfolio of soft drinks. The company’s segments include Frito-Lay North America, Quaker Foods North America, and PepsiCo Beverages North America. Its product offerings also include branded dips, cheese-flavored snacks, tortillas, and dairy products.

On August 2, 2022, PEP entered into a strategic agreement with premium Romanian spring water AQUA Carpatica under which the company will own a 20% equity stake in AQUA Carpatica. This partnership unfolds an opportunity to expand its offerings in Europe and other markets.

“With its excellent taste and premium positioning, AQUA Carpatica is a perfect complement to PepsiCo’s existing premium beverage portfolio,” said Silviu Popovici, CEO of PepsiCo Europe.

On July 21, 2022, the company’s Board of Directors paid the quarterly dividend of $1.15 per share on its common stock, representing an increase of 7% year-over-year. This dividend is payable on September 30, 2022.

The company’s four-year average dividend yield is 2.82%, and its forward annual dividend of $4.60 translates to a 2.72% yield. Its dividend has grown at a 5.7% CAGR over the past three years and a 7.4% CAGR over the past five years. The company has increased its dividends for 49 consecutive years.

PEP’s net revenue increased 5.2% year-over-year to $20.22 billion for the second quarter that ended June 11, 2022. The company’s gross profit increased 4.5% year-over-year to $10.81 billion, while its non-GAAP operating profit rose 7.5% from the year-ago value to $3.41 billion. In addition, its non-GAAP net income increased 8% year-over-year to $2.58 billion. Also, its non-GAAP EPS came in at $1.86, up 8.1% year-over-year.

The consensus EPS estimate of $1.83 for the third quarter ending September 30, 2022, represents a 2.3% improvement year-over-year. The consensus revenue estimate of $20.71 billion for the current quarter indicates a 2.6% increase from the same period last year. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 10% to close the last trading session at $168.92.

PEP’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has a B grade for Stability, Sentiment, and Quality. Within the A-rated Beverages industry, it is ranked #10 out of 34 stocks. Click here to see the other ratings of PEP for Growth, Value, and Momentum.

Costco Wholesale Corporation (COST)

Famous membership warehouse operators COST offers branded and private-label products throughout various merchandise categories. It operates across the U.S., Canada, the United Kingdom, Japan, and China. In addition, its broad product portfolio includes almost everything from dry groceries to automotive care products. It currently operates 833 warehouses.

COST’s four-year average dividend yield is 1.45%, and its current dividend translates to a 0.72% yield. Its dividend has grown at CAGRs of 12.7% and 12.8% over the past three and five years, respectively. The company paid a quarterly dividend of $0.90 per share on August 12, 2022.

COST’s total revenue increased 16.2% year-over-year to $52.60 billion for the third quarter that ended May 8, 2022. The company’s net income increased 10.9% year-over-year to $1.35 billion. Also, its EPS came in at $3.04, representing an increase of 10.5% year-over-year.

Analysts expect COST’s EPS and revenue for the quarter ended August 31, 2022, to increase 6.9% and 14.9% year-over-year to $4.17 and $71.99 billion, respectively. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 11.8% to close the last trading session at $499.52.

COST’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of B, equating to a Buy.

It has a B grade for Growth and Sentiment. It is ranked #22 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry. Click here to see the additional ratings of COST for Value, Momentum, Stability, and Quality.

Comcast Corporation (CMCSA)

CMCSA is a global media and technology company operating through five segments: Cable Communications; Media, Studios; Theme Parks; and Sky.

On September 14, 2022, the company’s Board of Directors announced an increase in its share repurchase program, raising the aggregate program authorization to $20 billion. This reflects the company’s strong cash flows and ability to boost shareholder returns.

On July 28, 2022, the company announced a quarterly dividend of $0.27 per share, payable on October 5, 2022.

CMCSA’s four-year average dividend yield is 1.99%, and its forward annual dividend translates to a 3.19% yield. Its dividend has grown at a 9.14% CAGR over the past three years and a 12% CAGR over the past five years.

CMCSA’s revenues increased 5.1% year-over-year to $30.02 billion in the fiscal second quarter (ended June 30, 2022). The company’s adjusted EBITDA increased 10.1% from the year-ago value to $9.83 billion. Its adjusted net income grew 14.3% from the year-ago value to $4.51 billion, while its adjusted EPS increased 20.2% from the year-ago value to $1.01.

Analysts expect CMCSA’s EPS and revenue to increase 10.7% and 2.1% year-over-year to $0.85 and $30.97 billion, respectively, in the fiscal fourth quarter (ending December 2022). The company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.

Shares of CMCSA declined 12.5% over the past month to close the last trading session at $33.84.

CMCSA has an overall rating of B, which translates to a Buy in our proprietary rating system. It has a B grade for Quality. Also, it is ranked #1 of nine stocks in the Entertainment – TV & Internet Providers industry.

In addition to the POWR Rating grades I’ve just highlighted, you can see the CMCSA ratings for Growth, Value, Momentum, Stability, and Sentiment here.


PEP shares were trading at $171.01 per share on Wednesday morning, up $2.09 (+1.24%). Year-to-date, PEP has gained 0.45%, versus a -17.80% rise in the benchmark S&P 500 index during the same period.


About the Author: Shweta Kumari


Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...


More Resources for the Stocks in this Article

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