In what may possibly be the biggest rival of all time between two companies, The Coca-Cola Company (KO ) and PepsiCo (PEP ) have battled in the “cola war” for decades. Below is a glance of how the two companies compare in seven charts.
Coca-Cola has reported earnings much higher than Pepsi as the company is much larger and is able to keep its profit margins well above its competitors. KO has outperformed PEP by far when it comes to beverages. Both Coke and Diet Coke are the top beverages sold in the United States. PEP differs from KO as it has diversified its company with a large snack segment, which is its most profitable business.
Unlike earnings, PEP has been consistently ahead of KO with revenue. Both of the companies rely on international sales for most of their revenue. PEP depends on beverage sales for just a quarter of its total revenue, while over two-thirds of KO’s revenue is from beverages [see also The Ten Commandments of Dividend Investing].
3. Consecutive Dividend Increases
For dividend investors, the reliability of a company’s dividend is crucial. Both KO and PEP have been consecutively raising dividends for decades. KO has been consecutively raising its dividend longer than any other company in the Dow 30 and PEP is also considered a dividend aristocrat.
4. Dividend Growth
Although both companies are similar when it comes to dividend yield and payout ratio, KO has raised its dividend an average of 8% per year in the last five years, while PEP has increased its dividend an average of 6% per year.
5. Social Media
Social Media may not seem like a big deal, but it is a great way for companies to interact with and advertise to their customers. By having a large social media presence and following, companies are able to obtain information about what their customers are thinking, which can give them a competitive edge.
The two companies have been rivals for years, which has resulted in high advertising costs for both companies. While Coca-Cola has clearly exceeded its competitor in the form of advertisements, Pepsi still spends over $1 billion per year, on average, on advertising.
Although PEP is a much smaller company than KO, PEP has more than twice as many employees as KO, as the company is much more diverse than KO.
The Bottom Line
While these two companies can be very different in terms of operations and product diversification, they are similar as dividend stocks. Both companies have proved to shareholders that they are committed to raising dividends, both have a yield near 3%, and both have similar payout ratios.
If you are interested in cola-related stocks, be sure to also check out Coke Stocks: Which Is Best for Dividend Investors? for information on KO’s bottling companies.