The economic landscape seems more unpredictable these days. Tariffs and ongoing tensions with Iran have kept prices elevated, which is compelling the Federal Reserve to refrain from lowering interest rates. This may hinder economic expansion. On top of that, the labor market isn’t exactly stable.
If you’re in the market for stocks, consider companies that deal in daily necessities. These firms typically sell products that aren’t heavily influenced by economic fluctuations.
Will AI create the world’s first millionaire? A recent report highlights a lesser-known company described as an “essential monopoly,” which supplies crucial technology needed by major players like Nvidia and Intel.
PepsiCo (NASDAQ:PEP) and Procter & Gamble (NYSE:PG) offer not just short-term investment opportunities; their dividends and valuations make them solid choices for long-term holds.
1. PepsiCo
PepsiCo operates under several well-known brands, offering beverages and snacks such as Pepsi, Mountain Dew, Gatorade, and Doritos. It’s not just about soda; they also produce items like water, chips, oatmeal, and rice.
However, the company has seen some drops in sales as consumers opt for more affordable alternatives amid high prices. Still, there are signs of recovery; for instance, PepsiCo’s first-quarter revenue grew by 2.6% year-over-year, even if the increase feels modest. There’s a small uptick in sales volume as well, which is promising.
For all of 2025, the adjusted sales showed a 2% rise; higher prices contributed about 4 percentage points, but it also faced a 2-point drop due to lower volumes. Company management is optimistic, projecting sales growth of 2% to 4% this year alongside a 4% to 6% boost in earnings per share. If they continue implementing strategies like targeted price drops, growth may accelerate soon.
Examining stock valuations, PepsiCo has a price-to-earnings (P/E) ratio of 24, which is below its 10-year median of 26. For comparison, the S&P 500 boasts a P/E of 32. Shareholders enjoy a dividend that increased by 4% earlier this year, marking 54 consecutive years of dividend hikes, earning the title of “Dividend King.” With a new quarterly payment of $1.48, the dividend yield stands at 4%—almost four times higher than the S&P 500’s yield of 1.1%.
2. Procter & Gamble
You likely encounter Procter & Gamble products every day; they range from shampoo and razors to laundry detergent and diapers. Their brands, including Head & Shoulders, Gillette, Oral-B, Tide, and Pampers, capture significant market share in essential items.
While many consumer product companies are experiencing sales challenges, Procter & Gamble posted a 3% sales increase in its fiscal third quarter, thanks to a 2-point growth from volume. This data has been adjusted for currency fluctuations and acquisitions or divestments.
The valuation of Procter & Gamble’s stock looks appealing when compared to its historical P/E and the broader market. It maintains a P/E ratio of 21, which is lower than its 10-year average of 25.
Procter & Gamble is also known for its commitment to paying and growing dividends. Recently, they announced a 3% increase, bringing the quarterly dividend to $1.0885 per share. They’ve been distributing dividends since 1890 and have raised them annually for 70 years. At this rate, the dividend yield stands at 3.1%, nearly three times the S&P 500’s yield.
Should you buy PepsiCo stock now?
Before making any decision to invest in PepsiCo, consider this:
According to Motley Fool Stock Advisor, their analyst team has identified ten stocks they believe are poised for impressive returns in the coming years. Interestingly, PepsiCo wasn’t included among them.
Now, keep in mind that the average return from this stock advisory service has outperformed the S&P 500 significantly. The community built around this service is geared towards retail investors.
