MKC vs PEP: Dividend Yield, Growth & Safety Comparison
Mccormick & Co Inc (MKC) and Pepsico Inc (PEP) are both in the Consumer Staples sector, making them natural rivals for dividend investors. PEP edges ahead on yield at 3.37% versus MKC's 2.61%. Both stocks show similar dividend growth rates, each around 7.1% over the past five years. MKC holds the edge in dividend safety with a "Moderate" rating. Both are classified as Dividend Aristocrats.
Key Metrics Comparison
| Metric | MKC | PEP |
|---|
| Dividend Yield | 2.61% | 3.37% |
| Annual Dividend | $1.80 | $5.62 |
| 5-Year CAGR | 7.1% | 7.3% |
| Payout Ratio | 61% | 94% |
| Consecutive Years | 27 | 27 |
| Price | $71.91 | $166.01 |
Yield Comparison
Pepsico Inc (PEP) currently yields 3.37%, which is solid for the broader market. That's 0.76% more than Mccormick & Co Inc (MKC), which yields 2.61%. In dollar terms, PEP pays $5.62/share annually versus MKC's $1.80/share.
Dividend Growth
Over the past five years, PEP has grown its dividend at a 7.3% CAGR compared to MKC's 7.1%. MKC: Dividend growth has been steady, with a 3-year CAGR of 7.3% and a 5-year CAGR of 7.1% (10-year: 8.5%). PEP: Dividend growth is slowing — the 3-year CAGR of 6.6% trails the 5-year rate of 7.3% and the 10-year rate of 7.4%.
Dividend Safety
MKC's dividend safety is rated "Moderate." The payout ratio of 61% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.6x. PEP's dividend safety is rated "At Risk." The payout ratio of 94% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.1x. MKC's payout ratio of 61% is more conservative than PEP's 94%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in PEP generates approximately $337/year in dividend income, compared to $261/year from MKC — a difference of $76/year. At $100,000, that gap widens to $760/year.
Verdict
- Best for income: PEP
- Best for safety: MKC
Frequently Asked Questions
Which has a higher dividend yield, MKC or PEP?
Pepsico Inc (PEP) has a higher dividend yield of 3.37% compared to Mccormick & Co Inc (MKC) at 2.61%.
Is MKC or PEP a better dividend growth stock?
Pepsico Inc has the stronger dividend growth with a 5-year CAGR of 7.3%, compared to Mccormick & Co Inc's 7.1%.
Which is safer for dividend income, MKC or PEP?
Mccormick & Co Inc's dividend safety is rated "Moderate" while Pepsico Inc is rated "At Risk." The payout ratio of 61% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.6x. The payout ratio of 94% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.1x.
How much income does $10,000 in MKC vs PEP generate?
A $10,000 investment in MKC generates approximately $261/year in dividends, while the same amount in PEP generates about $337/year.
Is MKC or PEP a Dividend Aristocrat?
Mccormick & Co Inc is a Dividend Aristocrat (27 years) and Pepsico Inc is a Dividend Aristocrat (27 years).
Which has a lower payout ratio, MKC or PEP?
Mccormick & Co Inc has a lower payout ratio of 61% compared to Pepsico Inc's 94%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
MKC vs PEP: which is better for retirement income?
It depends on your priorities. PEP for current income, MKC for safety. Many retirement investors hold both for diversification.
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