Bank of America Securities has cut its rating on PepsiCo from “Buy” to “Neutral,” with a reduced price target of $155. The downgrade is rooted in weakening fundamentals across PepsiCo’s core divisions. Most notably, Frito-Lay North America is seeing declining volumes as snack price increases outpace what many consumers can afford.
🥤 PepsiCo is also lagging in key beverage trends, particularly in the fast-growing flavored soda, energy drink, and low-sugar categories. While the recent acquisition of Poppi, a probiotic soda brand, signals a shift toward healthier options, BofA remains cautious on the company’s ability to execute a broad brand refresh effectively.
💼 Overall, the downgrade reflects a more muted growth outlook in a competitive consumer landscape, even as PepsiCo remains a dividend powerhouse.
💰 Dividend Snapshot:
• 💵 Annual Dividend: $5.69 per share
• 📉 Yield: Around 3.88%
• 📈 53 consecutive years of growth
• 📊 Payout Ratio: ~76%
• 🗓️ Next Ex-Dividend Date: Early June 2025 (est.)
📌 PepsiCo’s dividend consistency is unmatched in its sector, but the high payout ratio could limit room for aggressive increases going forward, especially if top-line pressures persist. Investors may value the stable income but should temper expectations for near-term capital appreciation.