What do you guys think about Pepsi long term. Right now, Pepsi released earnings, with higher revenue than expected but missing on EPS with analysis predicting 2.21, and Pepsi came in with 2.20 dollars per share, while macroeconomic factors have consumers tightening household budgets in the United Stares and around the world, Pepsi is having issues moving product as people cut unnecessary spending. Their cash flow has taken a hit, and 90-95% of their free cash flow goes to paying dividends.
I feel that Pepsi is at a great risk of losing their ‘dividend king’ status of over 50 years of dividend increases, but in the short term it might be best to direct more cash to the expansion of the business instead of paying dividends.
With all of this in mind, I think that these macroeconomic headwinds will pass, and Pepsi will be just fine due to both international and domestic sales. With a wide variety of products all over the world, and expansion into new lines of business with new products, I think that investors are getting scared of Pepsi due to factors that won’t matter in a retirement dividend position.
What do you guys think? Are you buying Pepsi in your portfolio? Let me know what you think. Let’s bounce some ideas.