When studying the big three beverage companies, The Coca-Cola Company (NYSE:KO), PepsiCo (NYSE:PEP), and Dr Pepper Snapple Group Inc. (NYSE:DPS) you realize that they all possess qualities worthy of your attention. Here’s why.
Everyone knows Coca-Cola
The Coca-Cola Company (NYSE:KO) owns one of the most recognized brand names in the world. The cursive “Coca-Cola” against a red and white backdrop provides an attractive color and font scheme that resonates with the consumer psyche at large. Coca-Cola also owns a host of other well recognized brands in the sparkling and non-sparkling categories such as Sprite, Fanta, Minute Maid juice, Dasani bottled water, Fuze tea, and juice.
In The Coca-Cola Company (NYSE:KO)’s most recent quarter, global sparkling and non-sparkling volumes increased 3% and 6% respectively. Increasing consumer preference for perceived healthier non-sparkling beverages gave rise to higher non-sparkling growth. Overall revenue and operating cash flow declined 1% and 3% respectively due to a shorter quarter, currency headwinds and an increase in working capital. *Free cash flow swung from a negative $72 million to positive a $15 million due to lower capital expenditures.
The Coca-Cola Company (NYSE:KO) backed by its 250 bottling partners worldwide, a diverse product portfolio, and its 2020 vision gives the company the resources, diversity and focus to garner superior top and bottom line growth over the long term that could translate into superior share price gains. In addition, Coca-Cola paid out approximately 57% of its 2012 free cash flow in dividends equating to a 2.6% yield as of this writing.
PepsiCo the beverage and snack maker
PepsiCo (NYSE:PEP), in addition to selling beverages such as Pepsi Cola, Mountain Dew, and Aquafina bottled water also sells snacks. Pepsi owns the Frito Lay company which sells iconic brands such as Cracker Jacks, Munchos, Ruffles, Sun Chips, and Lay’s, in addition to many others. Snacks represented the highest growth within PepsiCo’s overall business, increasing volume 4% versus 3% for beverages.
In PepsiCo (NYSE:PEP)’s most recent quarter, revenue increased 1% driven mainly by increases in the Frito Lay and Latin American Foods division. Free cash flow swung from a negative $989 million to a positive $407 million. PepsiCo’s also paid out roughly 56% of its 2012 free cash flow in dividends, giving investors a 2.7% dividend yield.