Market volatility is back - and with a vengeance. While in 2017 my portfolio value seemed to just go up and up, 2018 has been much more rocky so far.
Having been on the sidelines for much of January and February, I decided to deploy some fresh capital and make some new buys.
On March 27 I bought 15 shares of PepsiCo, Inc. (PEP) for a total of $1,615.
On March 28 I bought 25 shares of Dominion Energy, Inc. (D) for a total of $1,686.
And then again on March 28 I bought 20 shares of BP, plc (BP) for a total of $797.
PepsiCo and Dominion are new positions in my portfolio, while BP is an addition to my existing position in this British energy giant.
In this post I will cover PepsiCo, why I liked the stock enough to initate a position and what these three purchases mean for my forward dividend income.
PepsiCo, Inc. operates as a food and beverage company worldwide.
Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos, and Santitas tortilla chips; and Cheetos snacks, branded dips, and Fritos corn chips.
The company’s Quaker Foods North America segment provides cereals, rice, pasta, mixes and syrups, granola bars, grits, oat squares, oatmeal, rice cakes, simply granola, and side dishes under the brands Quaker, Aunt Jemima, Cap’n crunch, life, Quaker Chewy, and Rice-A-Roni.
Its North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under the Aquafina, Diet Mountain Dew, Diet Pepsi, Gatorade, Mist Twst, Mountain Dew, Pepsi, Propel, and Tropicana brands; and ready-to-drink tea, coffee, and juices.
The company’s Latin America segment provides snack foods under the Cheetos, Doritos, Emperador, Lay’s, Marias Gamesa, Rosquinhas Mabel, Ruffles, Sabritas, Saladitas, and Tostitos; cereals and snacks under the Quaker brand; and beverage concentrates, fountain syrups, and finished goods under the 7UP, Diet Pepsi, Gatorade, H2oh!, Manzanita Sol, Mirinda, Pepsi, and Toddy brands.
Its Europe Sub-Saharan Africa segment offers snack food; cereals and snacks; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea products; and dairy products under the Agusha, Chudo, and Domik v Derevne brand names.
The company’s Asia, Middle East and North Africa segment provides snack foods under the Cheetos, Chipsy, Crunchy, Doritos, Kurkure, and Lay’s brands; cereals and snacks under the Quaker brand; beverage concentrates, fountain syrups, and finished goods; and ready-to-drink tea products.
The company was founded in 1898 and is headquartered in Purchase, New York.
PEP‘s current dividend yield is 2.99% – below the average 3.5% yield I strive for in building my portfolio.
The company is featured on David Fish’s list of Dividends Champions, Contenders and Challengers - boasting a 46 (!) year streak of growing dividend pay-outs.
The 5 year dividend growth is a decent 8.41% - with last year’s dividend growth coming in at 6.98%.
PEP‘s Earnings per Share (EPS) over the last five years shows an 2.92% decrease. Forward EPS Long Term Growth (3-5 Yrs) is estimated to be 7.57%.
The trailing 12 months Price/Earnings (P/E) is 32.04, which is above it’s 5 year average of 23.62. It is significantly lower than the industry’s 5 year average of 37.96.
EVA Dimensions (an equity research firm) states in their March 28 report that PEP’s Performance Risk Valuation score is at the 85th percentile of all firms in its industry, which leads to a recommendation to ‘Buy’.
It adds that PEP is more attractively priced in relation to its true value than all but a few of the stocks in its industry.
Ford Equity Research recommends a ‘hold‘ with a 12 month range of 52-week price range of $106.15 - $121.76.
Jefferson Research concludes that PEP shows strong earnings quality and balance sheet quality, and valuation suggests a lower amount of price risk, but cash flow quality and operating efficiency are both weak. When combined, PEP deserves a ‘Buy’ rating.
Buying 15 shares of PEP added $48.30 to my forward dividend cash flow.
My purchase of 25 shares of D added $83.50, while the BP purchase increased my annual dividends by $48.
