MKC vs PEP: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
PEP yields 0.76% more than MKC. In dollar terms, MKC pays $1.80/share vs PEP's $5.62/share annually.
Dividend Growth
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: 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: The payout ratio of 94% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.1x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in MKC vs PEP today?
At $71.91 per share, $10,000 buys about 139.1 shares of Mccormick & Co Inc (MKC). Each share pays $1.80 per year in dividends, so the position starts out generating roughly $250 per year — about $21 a month.
At $166.01 per share, $10,000 buys about 60.2 shares of Pepsico Inc (PEP). Each share pays $5.62 per year in dividends, so the position starts out generating roughly $339 per year — about $28 a month.
PEP is the larger income stream from day one: $88 per year more on the same $10,000 invested.
What could $10,000 of MKC or PEP income look like in 10 years?
Mccormick & Co Inc (MKC) has raised its dividend about 7.1% a year over the past five years. If that pace held, the $261 per year that $10,000 generates today at the current 2.61% yield would reach $519 per year by 2036 — a 5.2% yield on the original cost.
Pepsico Inc (PEP) has raised its dividend about 7.3% a year over the past five years. If that pace held, the $337 per year that $10,000 generates today at the current 3.37% yield would reach $679 per year by 2036 — a 6.8% yield on the original cost.
On those trailing rates, PEP pays more in 2036: $679 versus $519 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would MKC's dividend growth overtake PEP's higher yield?
It doesn't, on the trailing numbers. Pepsico Inc (PEP) yields more today (3.37% vs 2.61%) and has also grown its dividend at least as fast (7.3% vs 7.1% a year over five years). Unless MKC accelerates its raises or PEP stumbles, MKC never closes the income gap — PEP wins on both current income and growth.
Can MKC and PEP afford their dividends?
Mccormick & Co Inc (MKC) earns $2.93 per share against $1.80 paid out in dividends — 1.6x coverage (a 61% payout ratio).
Pepsico Inc (PEP) earns $5.99 per share against $5.62 paid out in dividends — 1.1x coverage (a 94% payout ratio).
MKC's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for PEP if earnings weaken.
Which fits an early-retirement income portfolio better, MKC or PEP?
For income you need right now, Pepsico Inc (PEP) leads: $100,000 invested today pays about $281 a month at the current 3.37% yield, versus $218 a month from Mccormick & Co Inc (MKC) at 2.61%.
On consistency: MKC has raised its dividend 27 consecutive years; PEP has raised its dividend 27 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $672/yr in MKC vs $946/yr in PEP by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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