Comparing Two Leading Soft Drink Giants: Coca-Cola versus PepsiCo in terms of Stock Performance
In the world of mature, slower-growth companies, Coca-Cola and PepsiCo continue to dominate the beverage industry. Recently, both companies reported their Q2 earnings for 2025, with PepsiCo's net income standing at $1.3 billion, albeit down from $3.1 billion a year ago. However, it's important to note that this figure would have narrowly increased without a $1.9 billion impairment charge on intangibles[1].
On the other hand, Coca-Cola reported a Q2 net income of $3.8 billion, marking an increase from $2.4 billion in the year-ago quarter[1]. Despite these figures, PepsiCo's stock has been outperforming Coca-Cola's over the previous year[1].
One significant area where PepsiCo stands out is in dividend returns. With a yield of almost 3.8%, PepsiCo's dividend far outpaces Coca-Cola's at around 2.9%[1]. This strong cash flow, coupled with a long history of dividend increases (53 consecutive years), makes PepsiCo a more suitable choice for investors seeking income[1].
Moreover, PepsiCo's product portfolio is more diversified, including beverages, snacks, packaged foods, and health-oriented acquisitions. This offers more stable revenue streams and growth potential beyond beverages[3]. In contrast, Coca-Cola's focus is primarily on beverages, which may limit revenue diversification[2].
PepsiCo's valuation is also more attractive, trading at a lower price-to-earnings ratio (~18.5x TTM P/E) compared to Coca-Cola's ~24x[1]. This valuation discount is appealing in light of PepsiCo's diversified business and improving operational momentum[1][2][3].
PepsiCo has shown modest but consistent revenue growth, with a 5-year average of ~6.7%, compared to Coca-Cola’s 6.1%[1]. The company is also driving growth through health-conscious product lines and supply chain optimizations via AI[1][3].
Coca-Cola, however, benefits from strong brand equity and operational margins. But its narrower focus on beverages may limit revenue diversification and lower its current income yield attractiveness for income investors[2][3].
In conclusion, for investors prioritizing income stability and a diversified revenue base, PepsiCo's combination of higher dividend yield, broader portfolio, lower valuation, and healthy growth outlook generally make it the potentially better investment choice over Coca-Cola[1][2][3].
[1] Yahoo Finance [2] MarketWatch [3] The Motley Fool
Investors seeking income might find PepsiCo more attractive, given its higher dividend yield compared to Coca-Cola, and the potential for stable revenue streams due to a diversified product portfolio. In the realm of finance, PepsiCo's valuation presents a lower price-to-earnings ratio, making it more appealing for a lucrative investment opportunity.
Considering the business aspect, PepsiCo's focus on a broader range of products, including beverages, snacks, packaged foods, and health-oriented acquisitions, may provide a more diversified revenue base compared to Coca-Cola's primary focus on beverages, which could potentially limit revenue diversification.
