Shares of PepsiCo (NASDAQ: PEP) are down 25% from their five-year high. That’s bad, but it’s even worse for Hormel (NYSE: HRL), which is down over 50% from its five-year high. Both companies are facing headwinds, but if history is any guide, they’re worth buying and holding for the long term, given their historically high yields: 4.1% for PepsiCo and 5.1% for Hormel. Here’s why.
There are problems, but they aren’t unusual
PepsiCo and Hormel are unloved right now because they are both dealing with real headwinds. At the industry level, inflation is running high, putting pressure on profit margins while also causing consumers to tighten their budgets. Meanwhile, consumer buying habits are shifting toward healthier fare, which means food makers must invest to adjust their portfolios.
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These are real problems and shouldn’t be ignored. However, they are fairly normal problems in the consumer staples sector. Hormel and PepsiCo both have histories that go back more than 100 years. They have survived through periods like this before, and it is highly likely they will do so again.
That’s underscored by the fact that both companies are Dividend Kings. That means they have increased their dividends annually for 50+ years. That isn’t something that happens by accident; it requires a strong business model that gets executed well in both good times and bad. Now is just a bad time, but that’s an opportunity if you like high-yield stocks.
PepsiCo is a diverse industry leader
PepsiCo will probably be the better choice for more conservative income investors. It operates globally, with businesses in the beverage, snack, and packaged-food spaces. It is the number one player in salty snacks and number two in beverages. The company has brand power, distribution might, marketing skills, and innovation chops that stand toe-to-toe with any consumer staples company.
In fact, despite current headwinds, the company’s organic sales increased by 1.3% in the third quarter of 2026. Unfortunately, that was far below key competitor Coca-Cola (NYSE: KO), which saw organic sales grow 7% in the quarter. That has investors downbeat, but PepsiCo is still finding ways to grow. And eventually, the business is likely to pick up again. If you buy it today, you can collect that lofty yield while you wait.
