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With the recent return of volatility in the stock market, investors have fallen back in love with sturdy consumer staples businesses -- especially the ones that pay out predictably rising dividends. PepsiCo (NASDAQ: PEP) has been one of those relative winners so far in 2025, with shares up slightly even as the S&P 500 dropped 5%. Let's take a closer look at that beverage and snack food giant to see how it stacks up against its main drink rival, Coca-Cola (NYSE: KO).
Growth and outlook
Coca-Cola is the clear growth winner, despite consumers becoming more price-sensitive in the past year. Organic sales rose 14% in the most recent quarter, trouncing PepsiCo's 2% uptick. The beverage giant is projecting another solid year ahead as organic revenue expands by between 5% and 6%. PepsiCo's management team, on the other hand, forecast another year of low-single-digit revenue gains in 2025 after organic sales rose by just 2% last year.
Investors will be watching both companies' results for signs of inflation fatigue. That's more of a challenge for PepsiCo, though, due to its exposure to rising food ingredient prices. Its sales volume fell by 1% last quarter, compared to Coca-Cola's 2% uptick. Coca-Cola was also able to raise prices more aggressively in 2024 while keeping volume in positive territory. These factors suggest that Coca-Cola has a clearer path toward improving shareholder returns in 2025 and beyond.
Cash flow and returns
Both PepsiCo and Coca-Cola promise to reward investors with ample cash returns this year, thanks to their efficient businesses. PepsiCo is planning to spend $7.6 billion on dividends in 2025, along with $1 billion in stock buyback spending.
Coca-Cola executives also favor dividends as their main channel for cash returns. They spent $8 billion on dividend payments last year and $1.1 billion on stock buybacks. Yet PepsiCo delivers a higher yield at 3.55% today compared to Coca-Cola's 2.7% rate. Both companies hiked their dividend by the same 5% in 2025. As a result, income investors might prefer PepsiCo shares for their higher yield and attractive cash flow trends.
The price is right
You'll pay a premium to own Coca-Cola stock over PepsiCo, but the real question is whether it's worth the extra value. PepsiCo shares are trading at 18 times this year's expected earnings, compared to Coca-Cola's forward price-to-earnings (P/E) of 24. You see a similar valuation gap in terms of sales, with Pepsi trading at 2.3 times revenue to Coca-Cola's ratio of 6.5 times.