3 Reasons PepsiCo Stock Is a Must-Buy for Long-Term Investors

Group 1: Core Business Performance - PepsiCo experienced a 2% organic sales growth in 2024, driven by strong performance in international markets, despite a previous year's growth of 9% and challenges such as a significant safety recall [4] - The company anticipates another year of subdued growth, projecting organic sales to rise by at least 2% and profits to expand around 4% [4][10] - Historical performance indicates that PepsiCo has managed to thrive during consumer spending downturns, with core earnings rising by 9% in 2024 despite only a 2% increase in organic sales [10] Group 2: Dividend and Income Generation - PepsiCo offers a dividend yield of 3.6%, significantly higher than the 1.2% yield of the broader S&P 500, and is recognized as a Dividend King for increasing its payout for 53 consecutive years [5][6] - The latest dividend increase was 5%, supported by the company's robust cash flow, which amounted to $13 billion in operating cash flow over the last two years [6] Group 3: Valuation and Market Position - The stock is currently valued at 21 times earnings, close to a five-year low, making it an attractive option compared to competitors like Coca-Cola and McCormick, which are valued at 28 and 27 times earnings, respectively [7][8] - On a price-to-sales basis, PepsiCo's ratio of 2.2 represents a multiyear low, indicating a potentially undervalued position in the market [8]