The S&P 500 Dividend Aristocrats is a collection of large cap companies that have increased their dividend every year for the past 25 years. By returning cash to investors these companies show that they are willing to partner with investors. A quick look at these firms shows that it is simple to build a strong dividend portfolio by just looking at normal, everyday products.
Food and Drinks
Oligopolized markets make for great investments if you can invest the top players. Building a global supply chain the size of PepsiCo, Inc. (NYSE:PEP)‘s is no easy task. Billions of dollars in financial and human capital are required to accomplish such a feat, and this helps to keep potential competitors at bay. Years back PepsiCo, Inc. (NYSE:PEP)decided to expand from a strictly beverage-only strategy. The diversification into snacks helps to decrease risk, as now the soft drink market only affects a portion of its sales.
Pepsi’s return on investment of 13.5% and profit margin of 9.5% are not amazing, but they still provide Pepsi with enough capital to continue growing. It has an EPS growth rate of 4.13% over the past five years. Growth is expected to continue with the company’s further expansion into the health food segment. PepsiCo, Inc. (NYSE:PEP)’s yield of 2.8% will not make anyone rich overnight, but the stability of the company’s business means that the company is the quintessential buy and hold stock.
The Coca-Cola Company (NYSE:KO) has taken a very different path from PepsiCo, Inc. (NYSE:PEP). The Coca-Cola Company (NYSE:KO)decided to focus on the beverage market. While it is famous for soft drinks it has a number of bottled water brands like Dasani.
Europe will continue to be a sore point, but growing in developing markets will boost The Coca-Cola Company (NYSE:KO) over the long term. The company is well positioned to benefit from growing per capita GDP in China and India with a wide network of distributors in these nations.