Picture two blue-chip companies that have raised their dividends for more than five decades.
They sell drinks and snacks to the same shoppers, yet the past year has treated their shareholders very differently.
PepsiCo has trailed Coca-Cola over the last 12 months.
Since October 2025, shares of Coca-Cola (KO) have surged 36% after adjusting for dividends. Comparatively, Pepsi (PEP) stock is down 10%.
Two recent management discussions could help explain the gap. They also hint at whether 2027 could flip the script.
Also Read: Goldman resets PepsiCo stock target amid inflation and cost pressures
Why Pepsi lagged Coke
In its Oct. 8 third-quarter call, PepsiCo reported organic revenue growth of 3.1%. CEO Ramon Laguarta said that was the fastest pace since the fourth quarter of 2023.
Core operating profit rose 3%, and earnings per share rose 2%.
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Organic sales in international markets rose 8%, while operating margin widened by 105 basis points. Laguarta said international already makes up 45% of Pepsi’s profit in 2026.
“We are not satisfied with the performance in the U.S.,” Laguarta noted.
North America beverages slowed in the quarter, while hydration and energy drinks performed well. Pepsi also cut its fourth-quarter earnings outlook.
CFO Steve Schmitt said margin performance is running below management estimates.
Sales are still expected to remain robust, which will be offset by higher input costs and lower profit margins.
Schmitt said it is keeping its growth investments in place, including advertising spending in both North America and international markets.
This strategy leaves little room to absorb higher costs.
Pepsi’s hedges, which lock in prices for six to 12 months, are starting to roll off. A tariff benefit that helped North America beverages in the third quarter will also fade.
Schmitt said Pepsi is looking for structural cost cuts and plans to use pricing tools in the coming months to ease the pressure. He said those benefits should start helping as the calendar turns.
Pepsi CEO Ramón Laguarta is wary on U.S. sales.Bloomberg / Getty Images
Coke’s steadier playbook
At the Barclays consumer conference on Sept. 9, Coca Cola CEO Henrique Braun spoke less about repair and more about rhythm.
Braun has spent 30 years with the Coke system and aims to grow volume and pricing simultaneously.
He described the goal as “volume and price mix coming in tandem.” Braun also called the global consumer “uneven,” with lower-income shoppers under pressure. Coke is not immune to macro headwinds, but it has a broad product portfolio.
The company sells about 2.2 billion servings a day and runs 32 billion dollar brands across more than 200 countries.
Innovation travels fast inside that machine, and it often starts with shoppers.
Take Sprite + Tea. Braun said the idea came from consumers where Fans around the world were dropping tea bags into their Sprite at home, the same way they do with “dirty sodas.”
Coke saw those posts on social media and decided the habit made sense as a product.
It tested the idea, then launched it in the U.S. It worked, so the company moved it to China, a key tea market. Braun called it a highlight of Coke’s second quarter.
Braun calls the approach the “four I’s”: insights, innovation, intimacy with each market, and integration with digital.
Related: Coca-Cola is changing its soda lineup as Americans watch their weight
Basically, Coke starts with what shoppers are doing, builds a product around it, then fits it to the local market.
Two examples show how it works.
In Europe, Coke noticed people want less caffeine as the day goes on.
The European team turned that insight into Coca-Cola Zero Zero Zero, a redesign of an existing Zero Zero drink. It comes in a black-and-gold package, and Braun said it is doing well. He thinks it can now be launched in other countries.
In the U.S., Coke reworked Mr. Pibb. The new version has a bolder cherry flavor and a little more caffeine.
Coke’s message was simple: Do what we already do well, only better.
Pepsi’s 2027 comeback plan
Pepsi has real fixes in motion.
Snack volume in North America has swung from a low single-digit decline last year to low single-digit growth due to price resets and new product launches.
Advertising spending grew by double digits in both U.S. businesses last quarter.
Asked about splitting the company or changing its bottling model, Laguarta said Pepsi is open to revisiting every option, which includes speeding up refranchising in some regions.
Schmitt said cost savings and pricing should start helping as the calendar turns. However, costs may keep climbing.
Schmitt said raw materials, from packaging to ingredients, are getting more expensive. Pepsi’s hedges have held those costs down so far. As they expire, more of the increase will hit its profits, starting in the fourth quarter.
Coke is selling steadiness, and Pepsi is selling a comeback.
Pepsi vs. Coke dividend scorecard
Now the part income investors care about.
PepsiCo: In February, Pepsi raised its annualized dividend 4%, to $5.92 per share from $5.69. That was its 54th straight annual increase, according to a company statement. The quarterly payout is now $1.48.
The yield sits at just over 4%.
Pepsi has an annual dividend expense of around $8 billion, while it is projected to report a free cash flow of $10.5 billion in 2026. Data compiled by TIKR shows Wall Street estimates FCF to grow to $14.9 billion in 2030.
Coca-Cola: Coke raised its quarterly dividend about 4%, to $0.53 per share from $0.51 per share, its 64th straight annual increase. The yearly payout is $2.12 per share, and the yield is about 2.3%.
Coca-Cola has an annual dividend expense of around $9 billion, and it is projected to report free cash flow of $12.2 billion in 2026. Data compiled by TIKR shows Wall Street estimates FCF to grow to $15.8 billion in 2030.
Here is the simple math. At those yields, $10,000 in Pepsi earns roughly $440 a year. The same amount in Coke earns roughly $230.
So Pepsi pays more today, but Coke’s payout looks safer. The 2027 call likely comes down to one race: Do Pepsi’s savings arrive before costs bite?
Given consensus price targets, Coca-Cola stock trades at a discount of 5.5%. Comparatively, Pepsi stock offers an upside potential of less than 4%.
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