12 Best Income Stocks to Buy Now

3. PepsiCo, Inc. (NASDAQ:PEP)

Number of Hedge Fund Holders: 68

Dividend Yield as of December 28: 3.96%

PepsiCo, Inc. (NASDAQ:PEP) is one of the best dividend stocks to invest in.

On December 19, BofA analyst Peter Galbo raised the firm’s price target on PepsiCo, Inc. (NASDAQ:PEP) to $164 from $155 and kept a Neutral rating on the shares. Looking ahead to 2026, Galbo said the biggest open question for consumer staples remains consumption growth. Valuations across the group are still uneven, and “there feels little to get them off the sidelines in ’26 until fundamentals signal a greater turning of the tide,” he wrote in a year-ahead note.

Earlier in the month, on December 8, PepsiCo, Inc. (NASDAQ:PEP) announced a review of its North America supply chain. The company said it plans to aggressively cut costs to support growth after weeks of discussions with activist investor Elliott Investment Management.

Elliott disclosed a $4 billion stake in PepsiCo in September and has pressed the company to consider several moves. Those include refranchising or spinning off its bottling operations and evaluating the sale of non-core food assets. PepsiCo also said it will make structural changes that will affect some jobs in the US and Canada. The plan calls for more affordable pricing tiers and simpler ingredient lists across its snack portfolio. Cost reduction is a major focus, and the company aims to eliminate nearly 20% of its US product lines by early next year and shut down several manufacturing lines.

Alongside those cuts, PepsiCo, Inc. (NASDAQ:PEP) plans to increase automation and digital tools across production. Management expects those changes to deliver at least 100 basis points of core operating margin expansion in total over the next three fiscal years.