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Pepsi Increases Dividend Payout And Adds A Bonus

|Includes: KO, PepsiCo Inc. (PEP)

Pepsi Answers Coke's Dividend Increase And Goes A Step Further

Pepsi Answers Coke
About: PepsiCo (NYSE: PEP), Coca-Cola's (NYSE: KO), dividend, dividends, dividend stock, dividend stocks, stock dividend, stock dividends, dividend increase, dividend boost, dividend announcement
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PepsiCo (NYSE: PEP), the second-largest soft drink maker, answered rival Coca-Cola's (NYSE: KO) recent dividend increase with a 7% dividend increase of its own on Monday. Dow component Coke announced a 7% dividend increase last month, which took its annual payout to $1.76 a share. By comparison, Pepsi's 7% dividend boost takes that dividend to $1.92 a share on an annual basis.

Coke currently yields 3.3% while Pepsi shares will yield 2.9% based on Monday's closing price when factoring in the new dividend. On the surface, investors seeking the safety of a consumer staples stock may drawn to Coke on the basis of a yield that is higher than Pepsi, but Pepsi went a step further with its dividend announcement. Pepsi will also repurchase $15 billion of its own shares through 2013.

The company is extending a $6.4 billion buyback plan that was set to expire in June and plans to repurchase $4.4 billion of its own stock this year. Based on Monday's closing price of $66.15, Pepsi could repurchase roughly 226.7 million of its 1.57 billion shares outstanding for $15 billion. And it bares noting that regardless of what cola one prefers, Pepsi shares are up 12% in the past six months while Coke shares are up less than 2%.

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Disclosure: no position