It’s been a great year for Coca-Cola (NYSE: KO) shareholders so far. The stock’s up more than 16% since the end of 2025, easily outperforming the S&P 500 and the Nasdaq Composite.
It’s not too tough to figure out why, either. With the market wobbling amid concerns about artificial intelligence, investors are looking for certainty. With 64 consecutive years of dividend increases to its credit, the beverage behemoth clearly offers it.
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If you’re looking for a better dividend-paying option for the latter half of 2026, consider fellow Dividend King and direct beverage rival PepsiCo (NASDAQ: PEP). Here’s why.
The differences are no longer a liability
At first blush, the two consumer product outfits are seemingly so similar that they’re almost interchangeable. But look under the hood. The differences are surprisingly stark.
For instance, whereas Coca-Cola outsources the bulk of its production and distribution, PepsiCo owns and operates most of its own bottling operations. It’s also the name behind snack chip brands Lay’s, Doritos, Cheetos, and others, as well as Quaker Oats.
And these differences are a key reason PepsiCo shares have lagged Coke’s for more than two years. Coca-Cola maintains its higher margins even when inflation is hitting bottlers and consumers alike. PepsiCo doesn’t. As its own bottler, higher input and operational costs are pinching profit margins. Snack foods are more sensitive to inflationary pressures, as well. That’s why last year’s revenue barely budged, while per-share profits fell 14% year over year.
As the old adage goes, nothing lasts forever. Although it arguably took the company a little too long to figure it out, consumer-friendly price breaks and the launch of increasingly popular snacks like FiberPop and Doritos protein chips are making a difference. PepsiCo’s first-quarter organic revenue improved a respectable 2.6% year over year, which — importantly — grew operating income to the tune of 24%, driving per-share profits up from $1.33 in Q1 of last year to $1.70 this year. Analysts are looking for similar progress this year and through next.
No reason to wait
This impending turnaround isn’t yet reflected in the stock’s performance. Given how long it took the company to respond initially to the pickier, inflation-riddled environment, investors may be understandably hesitant to believe it’s happening until they see further evidence.