The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), Dr Pepper Snapple Group (DPS): Can Non-Alcaholic Beverages be Fun?

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While life’s great debate has always been The Coca-Cola Company (NYSE:KO) or PepsiCo, Inc. (NYSE:PEP), Dr Pepper is trying to make a name for itself in the competitive nonalcoholic beverage business.  Despite issues surrounding health problems with sugary drinks, these companies have been making strides in developing healthier product offerings.  They also have portfolios of globally recognized brands and offer strong dividend yields in excess of 2.5%.

The Coca-Cola CompanyThe Leader

The Coca-Cola Company (NYSE:KO), the world’s largest beverage maker, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide.  The company’s primary brands are Coca-Cola, Diet Coke, Coca-Cola Light, Coca-Cola Zero, Sprite, Fanta, Minute Maid, Powerade, Aquarius, Dasani, Glaceau, and Vitaminwater.

The Coca-Cola Company (NYSE:KO) enjoyed a successful 2012 as sales rose by 3.17% over the prior year and operating income increased by 6.1%.  The company continued to make acquisitions on 2012, introduced over 500 new products (100 of which are zero calorie or sugar free), and added two new billion-dollar brands, bringing its total to 16.

The Coca-Cola Company (NYSE:KO) currently trades at a P/E of 22.56, above its five-year average of 17.48.  The company pays a dividend of 2.61% and has a five-year average dividend growth rate of 8.06%

The Broader Portfolio

PepsiCo, Inc. (NYSE:PEP) operates as a food and beverage company worldwide.  The company’s food division offers Lays, Ruffles, Doritos, Tostitos, Cheetos, branded dips, Fritos, Quaker Oatmeal, Aunt Jemima, Chewy granola bars, Capn Crunch, Life, and Rice-a-Roni.  The beverage group offers Pepsi, Mountain Dew, Gatorade, Diet Pepsi, Aquafina, 7UP, Diet Mountain Dew, Tropicana Pure Premium, Sierra Mist, and Mirinda brands; and ready-to-drink tea and coffee products.

PepsiCo, Inc. (NYSE:PEP) did not have a successful 2012 as revenues dropped by 1.5% versus the prior year and operating income decreased by 4.1%. PepsiCo, Inc. (NYSE:PEP) does stand to benefit from its wider product offerings, and has a large brand portfolio of healthy items including fruit juice, hummus, oatmeal and Gatorade.  The company also saw strong results in the first quarter of 2013 with organic revenue growth of 4.4%.

The company has rebounded well from a weak 2012 and currently trades within $1 of its 52-week high.  The P/E ratio stands at 21.49 versus a five-year average of 17.16.  The dividend yield is 2.71% with a five-year average dividend growth rate of 8.64%

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