PEP vs WMT: Dividend Yield, Growth & Safety Comparison
Pepsico Inc (PEP) and Walmart Inc. (WMT) are both in the Consumer Staples sector, making them natural rivals for dividend investors. PEP offers a significantly higher 3.37% yield compared to WMT's 0.72%, a gap of 2.65%. Both stocks show similar dividend growth rates, each around 7.3% over the past five years. WMT holds the edge in dividend safety with a "Safe" rating. Both are classified as Dividend Aristocrats.
Key Metrics Comparison
| Metric | PEP | WMT |
|---|
| Dividend Yield | 3.37% | 0.72% |
| Annual Dividend | $5.62 | $0.91 |
| 5-Year CAGR | 7.3% | 6.4% |
| Payout Ratio | 94% | 32% |
| Consecutive Years | 27 | 43 |
| Price | $166.01 | $133.79 |
Yield Comparison
Pepsico Inc (PEP) currently yields 3.37%, which is solid for the broader market. That's 2.65% more than Walmart Inc. (WMT), which yields 0.72%. In dollar terms, PEP pays $5.62/share annually versus WMT's $0.91/share.
Dividend Growth
Over the past five years, PEP has grown its dividend at a 7.3% CAGR compared to WMT's 6.4%. 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%. WMT: Dividend growth is accelerating — the 3-year CAGR of 11.2% exceeds the 5-year rate of 6.4% and the 10-year rate of 3.9%.
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. WMT's dividend safety is rated "Safe." The payout ratio of 32% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.1x. WMT's payout ratio of 32% 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 $72/year from WMT — a difference of $265/year. At $100,000, that gap widens to $2650/year.
Verdict
- Best for income: PEP
- Best for growth: PEP
- Best for safety: WMT
Frequently Asked Questions
Which has a higher dividend yield, PEP or WMT?
Pepsico Inc (PEP) has a higher dividend yield of 3.37% compared to Walmart Inc. (WMT) at 0.72%.
Is PEP or WMT a better dividend growth stock?
Pepsico Inc has the stronger dividend growth with a 5-year CAGR of 7.3%, compared to Walmart Inc.'s 6.4%.
Which is safer for dividend income, PEP or WMT?
Pepsico Inc's dividend safety is rated "At Risk" while Walmart Inc. is rated "Safe." 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 32% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 3.1x.
How much income does $10,000 in PEP vs WMT generate?
A $10,000 investment in PEP generates approximately $337/year in dividends, while the same amount in WMT generates about $72/year.
Is PEP or WMT a Dividend Aristocrat?
Pepsico Inc is a Dividend Aristocrat (27 years) and Walmart Inc. is a Dividend Aristocrat (43 years).
Which has a lower payout ratio, PEP or WMT?
Walmart Inc. has a lower payout ratio of 32% compared to Pepsico Inc's 94%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
PEP vs WMT: which is better for retirement income?
It depends on your priorities. PEP for current income, PEP for dividend growth, WMT for safety. Many retirement investors hold both for diversification.
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