3M Co (MMM), Cracker Barrel Old Country Store, Inc. (CBRL) & PepsiCo, Inc. (PEP): Are These Dividend Payers Worthy Investments?

An iconic portfolio of snacks and beverages

Food and beverage giant PepsiCo, Inc. (NYSE:PEP) currently pays $2.27 per share per year in dividends and yields 2.8%. Pepsi’s bottling and distribution infrastructure serve as a significant barrier to entry for competitors. Food and beverages never go out of style.

PepsiCo’s brand portfolio consists of some of the most recognized brands in the world. These brands include Pepsi Cola, Mountain Dew, Lay’s potato chips, and Quaker oats. This gives the company product diversity that competitors such as Coca-Cola lack.

In 2012, PepsiCo, Inc. (NYSE:PEP)’s overall revenue declined 1.5% due to adverse currency translations and restructuring. Free cash flow increased 3% due to lower capital expenditures. PepsiCo, Inc. (NYSE:PEP) paid 56% of its free cash flow in dividends.

PepsiCo looks okay balance sheet wise. Its cash to stockholder’s equity stood at 30% as of the end of last year. PepsiCo, Inc. (NYSE:PEP)’s long-term debt to equity ratio stands at 105%. Its operating income exceeds interest expense by a respectable 10 times.

PepsiCo’s high barriers to entry, its portfolio of needed food and beverage products, and brand name recognition should protect and possibly increase its dividend for years to come as PepsiCo, Inc. (NYSE:PEP) expands into emerging markets and continues with product innovation in already established markets.

Conclusion

In summary, you can rest easy when you see dividend paying companies such as these that provide customers with needed products that will never go out of fashion or continually build new products that replace old ones, provide differentiated positive experiences and possess brand equity. All of these things keep the customer coming, which provides the subsequent cash flow foundation for future dividends.

The article Are These Dividend Payers Worthy Investments? originally appeared on Fool.com.

William is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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