PEP vs PG: Dividend Yield, Growth & Safety Comparison
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.
Key Metrics Comparison
| Metric | PEP | PG |
|---|
| Dividend Yield | 3.37% | 2.63% |
| Annual Dividend | $5.62 | $4.18 |
| 5-Year CAGR | 7.3% | 12.5% |
| Payout Ratio | 94% | 62% |
| Consecutive Years | 27 | 0 |
| Price | $166.01 | $160.56 |
Yield Comparison
Pepsico Inc (PEP) currently yields 3.37%, which is solid for the broader market. That's 0.74% more than PROCTER & GAMBLE Co (PG), which yields 2.63%. In dollar terms, PEP pays $5.62/share annually versus PG's $4.18/share.
Dividend Growth
Over the past five years, PG has grown its dividend at a 12.5% CAGR compared to PEP's 7.3%. 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'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. PG's dividend safety is rated "Moderate." 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. PG's payout ratio of 62% 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 $263/year from PG — a difference of $74/year. At $100,000, that gap widens to $740/year.
Verdict
- Best for income: PEP
- Best for growth: PG
- Best for safety: PG
Frequently Asked Questions
Which has a higher dividend yield, PEP or PG?
Pepsico Inc (PEP) has a higher dividend yield of 3.37% compared to PROCTER & GAMBLE Co (PG) at 2.63%.
Is PEP or PG a better dividend growth stock?
PROCTER & GAMBLE Co has the stronger dividend growth with a 5-year CAGR of 12.5%, compared to Pepsico Inc's 7.3%.
Which is safer for dividend income, PEP or PG?
Pepsico Inc's dividend safety is rated "At Risk" while PROCTER & GAMBLE Co is rated "Moderate." The payout ratio of 94% is elevated, which may indicate the dividend could be cut if earnings decline. Earnings cover the dividend 1.1x. 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.
How much income does $10,000 in PEP vs PG generate?
A $10,000 investment in PEP generates approximately $337/year in dividends, while the same amount in PG generates about $263/year.
Is PEP or PG a Dividend Aristocrat?
Pepsico Inc is a Dividend Aristocrat with 27 consecutive years of increases. PROCTER & GAMBLE Co does not currently qualify for aristocrat status.
Which has a lower payout ratio, PEP or PG?
PROCTER & GAMBLE Co has a lower payout ratio of 62% compared to Pepsico Inc's 94%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
PEP vs PG: which is better for retirement income?
It depends on your priorities. PEP for current income, PG for dividend growth, PG for safety. Many retirement investors hold both for diversification.
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