Lee Jackson
7 min read
Quick Read
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JNJ and PG both earn ‘Very Safe’ dividend ratings, each covering payouts with roughly 62% of free cash flow and decades of unbroken increases.
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PepsiCo’s 4.70% yield leads the group but its dividend consumes 103% of free cash flow, making it the riskiest of the four.
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PepsiCo leads all four with a 6.6% five-year dividend CAGR, though recent raises for all four slowed to the low-single-digit range.
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Retirees who live on portfolio income need dividends that keep coming through recessions, rate shocks, and weak quarters. Four household names sit at the center of many of those portfolios: Johnson & Johnson (NYSE:JNJ), Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), and PepsiCo (NASDAQ:PEP). This year has tested each one differently. J&J is on track for its first year above $100 billion in revenue. Coca-Cola leveraged the FIFA World Cup to achieve its strongest comparable volume growth in 17 years (excluding the COVID-19 recovery period). P&G is absorbing about $1 billion in after-tax cost pressures, and PepsiCo is spending heavily to win back North American snack buyers.
The yields above use the October 2 closing prices. Below, I test each payout against earnings, cash flow, debt, and management guidance.
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Three Payouts Sit Near 60% While PepsiCo Runs Hot
