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Coca-Cola and PepsiCo: Which Stock Had Better Returns?

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Dec. 14 2018, Published 12:38 p.m. ET

YTD total returns

Coca-Cola (KO) has generated a total return of 11.6% YTD (year-to-date) as of December 13. So far, Coca-Cola has outperformed PepsiCo (PEP). PepsiCo has delivered a total return of ~2.0% since the beginning of 2018. In comparison, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index, has delivered a total return of 0.74% YTD as of December 13. A stock’s total return takes into account the change in the stock price and dividends paid by the company.

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Coca-Cola’s stock price has risen 7.8% on a YTD basis as of December 13, while PepsiCo’s stock price has declined 1.3%. PepsiCo reported its third-quarter results on October 2. The snack food and beverage maker exceeded analysts’ expectations for the third quarter. However, the company lowered its earnings guidance due to higher-than-expected currency headwinds. PepsiCo’s margins fell in the third quarter due to higher costs.

Coca-Cola reported improved margins and beat analysts’ third-quarter expectations.

Dividend yields

As of December 13, Coca-Cola and PepsiCo both had a dividend yield of 3.2%. Coca-Cola and PepsiCo are “dividend aristocrats,” which is a term used for companies that have raised their dividend for at least 25 consecutive years. Earlier in 2018, Coca-Cola raised its annual dividend 5.4% to $1.56 per share. Coca-Cola increased its dividend for the 56th consecutive year. PepsiCo increased its annualized dividend 15.2% to $3.71 per share in 2018. PepsiCo increased its dividend for the 46th straight year.

As of December 13, Coca-Cola and PepsiCo were trading at 12-month forward PE ratios of 23.0x and 20.3x, respectively. Analysts expect Coca-Cola’s adjusted EPS to grow 9.0% to $2.08 in 2018 and 6.7% in 2019. PepsiCo’s adjusted EPS is expected to increase 8.2% to $5.66 in 2018. Currently, analysts expect PepsiCo’s 2019 adjusted EPS to increase 5.5%.

Next, we’ll discuss Coca-Cola and PepsiCo’s revenues.

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