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PepsiCo Raises Dividend by 5% As Higher Prices Loom

PepsiCo Inc. (PEP) is a global food and beverage company with a complementary portfolio of brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. These products are sold in more than 200 countries and territories around the world.

The company generated 34% of its revenue from PBNA, 29% from FLNA, 13% from Europe, 8.4% from LatAm, 6.4% from APAC, 6% from AMESA and 4.4% from QFNA during the first quarter of 2021.

Strong Q1 Results as Inflation Looms

PepsiCo reported first-quarter revenue that rose by 6.8% to $14.82 billion, beating consensus estimates by $280 million, with non-GAAP earnings of $1.21 per share, beating consensus estimates by nine cents. For the full year, the company expects a mid-single-digit increase in organic revenue and a high-single-digit increase in core constant currency earnings.

While first-quarter earnings came in better than expected, PepsiCo and other consumer product companies have warned of higher consumer prices in the near term. Many of these companies have reported higher raw material costs, wage pressures and supply chain issues with the accelerating pace of re-opening and stimulus spending.

Despite these risks, analysts have been optimistic in recent months. UBS upgraded the stock from neutral to buy in mid-April, saying that the beverage giant was merely at the mid-point of an investment cycle that would yield a sustainable improvement to both top- and bottom-line growth. The analyst also cited a greater than-normal discount in the stock price.

The company raised its quarterly dividend by 5.1% to $1.075 per share, which represents a 2.94% forward yield. The dividend is payable on June 30, 2021, to shareholders on record as of June 4, 2021.

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