Is PepsiCo a Buy, Sell, or Hold in 2025?

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Justin Pope, The Motley Fool

Tue, Mar 25, 2025, 3:08 AM 5 min read

PepsiCo (NASDAQ: PEP) has been a productive concern for generations. The institution makes capable wealth to stock profits with investors via dividends and has raised the magnitude it pays for 52 consecutive years. You could telephone it a perk of selling beloved nutrient and beverage products to a planetary lawsuit basal of astir 8.2 cardinal radical (and growing). There's conscionable a seemingly endless runway for growth.

However, shares are successful a slump. PepsiCo has declined 25% since its all-time precocious successful 2023. It's a uncommon driblet for specified a respected company, its farthest autumn since the fiscal situation successful 2007-2009. Should investors bargain PepsiCo successful 2025, oregon has the institution peaked?

PepsiCo has grown for decades by selling much products, launching and acquiring caller brands, and raising its prices. However, maturation has progressively depended connected pricing since the COVID-19 pandemic. At look value, the illustration beneath shows that concern has been great, with awesome gross maturation implicit the past 5 years.

Yet it's not the full story. According to information from the Federal Reserve Bank of St. Louis, the terms of 16 ounces of murphy chips successful the United States has accrued by 44% since January 2020. A emblematic two-liter vessel of soda costs 33% much contiguous than backmost then. This information isn't brand-specific, but PepsiCo is the largest snack nutrient and second-largest non-alcoholic beverage institution successful the U.S. You tin reasonably link the dots here.

It's not that PepsiCo has padded its pockets; its gross borderline is astir the aforesaid contiguous arsenic 5 years ago. Instead, it reflects maturation done ostentation alternatively than consumers buying more. The occupation is that consumers volition lone tolerate higher prices for truthful long. PepsiCo notched 2% integrated gross maturation successful 2024, but its volumes slipped by 1%, truthful it was each price-driven. Frito-Lay volumes dipped 2.5% successful North America, and beverages fell 3%.

Consumers look to beryllium fed up with higher prices. At slightest successful the abbreviated term, further terms hikes whitethorn outgo it volume, offsetting the payment of raising prices. I'm not saying PepsiCo won't grow, but the institution could conflict to determination the needle pursuing these past 5 years.

Don't worry. PepsiCo isn't facing a collapse. This is inactive arsenic dependable a concern arsenic investors could anticipation for.

Most radical bargain PepsiCo banal for the dividend. The institution is simply a Dividend King, and that's improbable to alteration anytime soon. The dividend payout ratio is astir 65% of 2025 net estimates. PepsiCo's fortress-like equilibrium expanse is simply a bully information net, with $9.2 cardinal successful currency and a recognition standing comfortably successful investment-grade territory.