We recently published a list of 10 Defensive Dividend Stocks To Buy During Market Sell Off. In this article, we are going to take a look at where PepsiCo, Inc. (NASDAQ:PEP) stands against other defensive dividend stocks to buy during market sell off.
The importance of defensive dividend stocks only becomes clear when the broader market is taking a hit. The S&P is down nearly 8% in a month while Nasdaq has lost over 11.41%. Investors are wondering how to protect themselves from volatility and the answer lies in defensive stocks.
Here is a key distinction investors must understand. Growth stocks rely on price appreciation to generate shareholder returns, something that is hard to achieve when the broader market is facing a severe sell-off. Dividend stocks, on the other hand, became more attractive. They not only help reduce the volatility but as their price goes down, their yield becomes more attractive.
We therefore decided to identify the best stocks for such a scenario. To come up with the list of 10 defensive dividend stocks to buy during a market sell-off, we only considered stocks belonging to the Consumer Defensive sector with a market cap of at least $2 billion and a dividend yield of at least 3%.
A close up of a glass of a refreshing carbonated beverage illustrating the company’s different beverages.
PepsiCo, Inc. (NASDAQ:PEP)
PepsiCo, Inc. (NASDAQ:PEP) is the manufacturer, seller, marketer, and distributor of different convenient foods and beverages. It operates in Quaker Foods North America, Latin America, Frito-Lay North America, and other segments. A year of underperformance against peers has meant that the stock trades at an attractive dividend yield of 3.65%.
Pepsi (NASDAQ:PEP) is one of those consumer stocks that are suffering because people have started going for healthier alternatives. The management itself has admitted this by saying:
I think there is a higher level of awareness in general of American consumers towards health and wellness. And this is driven by potentially all the conversation around obesity drugs, but also other conversations that are happening around the space of health and wellness.
But great companies are always able to pivot at the right time and Pepsi isn’t any different. The company is trying its best to address this change in consumer preferences. A recent development in this regard is the company’s decision to acquire Poppi, a healthier soda alternative.
Poppi belongs to a family of beverages that are low in sugar and contain fruit juices, fiber, and apple cider vinegar. This makes it a better alternative to traditional carbonated drinks such as the ones that Pepsi sells. Poppi has tripled its sales every year since 2020 and now Pepsi (NASDAQ:PEP) wants in on the action to take it to the next level.
Overall, PEP ranks 9th on our list of defensive dividend stocks to buy during market sell off. While we acknowledge the potential of PEP as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as PEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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