The stock market It’s been a volatile start to 2025, with many high-tech stocks well off their highs as some investors question their lofty valuations and an uncertain economic environment. However, even in an uncertain market, there are many things investors can count on, such as beverage and snack company PepsiCo ( PEP ) and its continued dividend growth. I’m bullish on Pepsi stock based on its impressive dividend, long and proud history of steady growth over decades, moderate valuation and enduring demand for its products.
As an iconic American company with a name and logo that is instantly recognizable to billions of people around the world, there’s no question that Pepsi is a blue-chip stock. However, that doesn’t mean the stock trades at a premium, blue-chip price.
In fact, after falling 12.8% last year, Pepsi shares trade at 17.8 times 2024 full-year earnings estimates and an even cheaper 16.9 times December 2025 consensus earnings estimates. These numbers make Pepsi significantly cheaper than the broader market, according to the S&P 500.SPX) currently trades for 24.8 times earnings. Interestingly, Pepsi is cheaper than rival Coca-Cola ( KO ), which trades at 20.9 times estimated 2025 earnings.
This cheap price should give Pepsi strong downside protection in a volatile market and leave plenty of room for expansion, especially since the stock has traded at a high P/E ratio over the years.
In addition to this cheap price, Pepsi is a high dividend. It starts with dividend yield — Pepsi currently yields an attractive 3.7%, nearly triple the S&P 500’s 1.3% yield.
Beyond its above-average yield, Pepsi is an attractive dividend based on its multi-decade commitment to paying and growing its dividend. Pepsi has paid dividends to its shareholders for 52 consecutive years and has increased the payout amount in each of these 52 years. This consistency makes Pepsi the “Dividend King,” placing it among the rare stock companies that have consistently raised their dividend for at least 50 years. Other notable dividend kings include Coca-Cola, Target ( TGT ), Johnson & Johnson ( JNJ ), AbbVie ( ABBV ), and Walmart ( WMT ).
In a market where few things are certain, it’s nice to be able to ‘set and forget’ with a dividend king like Pepsi; This includes overtime pay as hourly work each year.
There is concern among investors that consumer demand for carbonated soft drinks in developed markets such as the United States will fall, but Pepsi is well positioned for this risk. Carbonated soft drinks have plenty of runway for growth in global and emerging markets. In addition, the Pepsi brand portfolio offers a wide range of beverage options for mature market consumers looking for healthy beverages such as bubbly sparkling water, pure leaf iced tea and tazo tea.
Finally, it’s important to remember that there’s a lot more to Pepsi than just drinks—it’s the number one player in the $250 billion-plus-a-year gourmet snack market, with popular brands like Doritos, Cheetos, Lay’s, Fritos, and more. All of them will be in your arsenal.
Late last year, the company announced it had agreed to acquire the 50% it didn’t already own in Sabra (known for its hummus and other dips and spreads), as well as a $1.2 billion deal for the tortilla chip maker. Siete shows that the company has a vision for long-term growth in this area.
Another good thing about Pepsi is that it is a consumer oriented company that produces products that have lasting demand from consumers. Even in a challenging macroeconomic environment, most customers who enjoy Pepsi or Diet Pepsi continue their weekly grocery trips. In an environment of inflation, consumers may be forced to delay or forego big-ticket purchases, but a six-pack or case of Pepsi or Diet Pepsi still represents a small percentage of the budget.
The same can be said about the sweet and salty snacks that Pepsi sells or foods like Quaker Oatmeal.
Turning to Wall Street, analysts have a median buy consensus on PEP stock based on four buys, three holds and zero sells over the past three months, as illustrated in the chart below. After a 9% decline in stock price over the past year, PEP’s average price of $167.86 per share indicates a potential upside of 13.6%.
See more PEP analyst ratings
I’m banking on Pepsi’s attractive, above-average 3.7% dividend yield and long and proud history of growing its dividend payout over five decades. In a hot and cold market and trends can be fleeting, this kind of long-term reliability is something to be cherished.
I’m also bullish on Pepsi stock’s below-average valuation—which should give investors good upside protection and plenty of exposure to the future—and its strong performance in selling consumer staples with sustained demand. This gives the stock a strong defensive backbone.
