Five chart to start your day

Coca-Cola vs. Pepsi shows a striking divergence in performance

In 1998, Greenbrier High student Michael Cameron received in-house suspension for wearing a Pepsi shirt on Coca-Cola Education Day, sparking international media coverage. The incident highlighted the intense rivalry between the beverage giants and underscored the cultural impact of corporate sponsorships in schools.

Nothing has really changed since then, but both seem to have expanded beyond belief. They are still doing really well with recent announcements of robust earnings and raised guidance.

Both companies are also celebrated as Dividend Aristocrats and have once again underscored their allure to dividend investors. While Coca-Cola remains a popular choice for a refreshing afternoon drink, PepsiCo's stock has delivered more to its shareholders over the past five years, outperforming Coca-Cola significantly. Take a look at the chart below.

Source: Eeagli

So what’s going on here? Both companies boast impressive dividend histories and similar metrics. But PepsiCo's portfolio extends beyond beverages to include snacks and foods through its Frito-Lay and Quaker Oats divisions.

These segments, constituting a significant portion of Pepsi's revenue and operating profit, provide resilience and potential for growth, particularly in international markets where Pepsi's scale translates to higher profits.

Pepsi’s CEO Ramon Laguarta highlights the considerable opportunity for international expansion, emphasising the potential for sustained profit growth. Consequently, PepsiCo might offer a clearer path to long-term profitability compared to Coca-Cola, presenting not only the potential for dividend growth but also enhanced stock value.

But that’s not to say Coca-Cola is a bad stock, it’s just the market believes Pepsi seems to have a clearer long-term runway for growth.

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