Coca-Cola and Altria Outshine PepsiCo as Dividend Kings

Two Dividend Kings are considered solid investments for the long term: Coca-Cola (KO) and Altria (MO). Both companies have consistently raised their dividends annually for over five decades. They've navigated six official recessions in the US over the past five decades, growing earnings and generating enough cash to cover their dividends.

Coca-Cola's diversified business model helps it maintain high margins and generate ample cash. The company sells concentrates and syrups to independent bottlers, which produce and distribute finished products. Altria has also been diversifying its business away from cigarettes by selling more smoke-free products. Analysts expect Coca-Cola's EPS to grow at a 7% CAGR from 2025 to 2028, while Altria's EPS is expected to increase at a 13% CAGR.

Both stocks are reasonably valued: Coca-Cola trades at 25 times next year's earnings, while Altria has a forward P/E ratio of 12. Coca-Cola pays a forward yield of 2.4%, with a low trailing payout ratio of 62%. Altria pays a forward yield of 6.5% and has a payout ratio of 89%.

PepsiCo (PEP), another Dividend King, is considered a weaker investment due to its asset-heavy beverage business and dependence on packaged foods. The company's North American business accounts for over half of its operating profits but has been struggling with stiff competition and declining volumes.