PEP vs PG: Dividend Comparison
Dividend data as of
Pepsico Inc (PEP) and PROCTER & GAMBLE Co (PG) are both in the Consumer Staples sector, making them natural rivals for dividend investors. PEP edges ahead on yield at 3.37% versus PG's 2.63%. For dividend growth, PG leads with a 5-year CAGR of 12.5% versus PEP's 7.3%. PG holds the edge in dividend safety with a "Moderate" rating. PEP is a Dividend Aristocrat with 27 years of consecutive increases.
Verdict
Yield Analysis
PEP yields 0.74% more than PG. In dollar terms, PEP pays $5.62/share vs PG's $4.18/share annually.
Dividend Growth
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%.
PG: Dividend growth is accelerating — the 3-year CAGR of 21.6% exceeds the 5-year rate of 12.5% and the 10-year rate of 8.5%.
Dividend Safety
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.
PG: The payout ratio of 62% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.6x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in PEP vs PG today?
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.
At $160.56 per share, $10,000 buys about 62.3 shares of PROCTER & GAMBLE Co (PG). Each share pays $4.18 per year in dividends, so the position starts out generating roughly $260 per year — about $22 a month.
PEP is the larger income stream from day one: $79 per year more on the same $10,000 invested.
What could $10,000 of PEP or PG income look like in 10 years?
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.
PROCTER & GAMBLE Co (PG) has raised its dividend about 12.5% a year over the past five years. If that pace held, the $263 per year that $10,000 generates today at the current 2.63% yield would reach $851 per year by 2036 — a 8.5% yield on the original cost.
On those trailing rates, PG pays more in 2036: $851 versus $679 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would PG's dividend growth overtake PEP's higher yield?
PROCTER & GAMBLE Co (PG) yields less today (2.63% vs 3.37%) but has grown its dividend faster — 12.5% vs 7.3% a year over the past five years. If both trends continued, a $10,000 position in PG would start out-earning the same position in PEP around 2032 (roughly 6 years from now), paying about $532 per year at the crossover. Before that point, PEP pays more each year; after it, the gap compounds in PG's favor.
Can PEP and PG afford their dividends?
Pepsico Inc (PEP) earns $5.99 per share against $5.62 paid out in dividends — 1.1x coverage (a 94% payout ratio).
PROCTER & GAMBLE Co (PG) earns $6.75 per share against $4.18 paid out in dividends — 1.6x coverage (a 62% payout ratio).
PG'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, PEP or PG?
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 $219 a month from PROCTER & GAMBLE Co (PG) at 2.63%.
With a decade or more before the income is needed, PG's faster dividend growth (12.5% vs 7.3% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
On consistency: 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 $946/yr in PEP vs $1,103/yr in PG 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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