Coca-Cola and Altria Shine as Dividend Kings

Coca-Cola and Altria are two Dividend Kings investors can consider buying now, while PepsiCo is one to avoid despite its high dividend yield. Coca-Cola's diversification into various beverage categories, including juices, teas, and bottled water, has helped it maintain high margins and generate ample cash for dividends. The company's asset-light business model allows it to focus on innovation and marketing rather than capital expenditures. Altria is also transforming its business by expanding into smoke-free products, which are expected to bring in at least $5 billion in revenue by 2028.

Analysts expect Coca-Cola's EPS to grow at a 7% CAGR from 2025 to 2028, while Altria's EPS is forecasted to increase at a 13% CAGR during the same period. Both stocks look reasonably valued, with Coca-Cola trading at 25 times next year's earnings and Altria at 12 times forward earnings.

PepsiCo, on the other hand, operates a more complex business model that includes bottling and distributing its own drinks, as well as selling packaged foods through Frito-Lay and Quaker. This asset-heavy approach has several weaknesses, including higher capital expenses and stiff competition in the packaged foods market.

While PepsiCo's EPS is expected to grow at a 14% CAGR from 2025 to 2028, its stock trades at just 15 times forward earnings, making it less attractive than Coca-Cola or Altria. Despite its high dividend yield of 4.6%, investors should approach PepsiCo with caution due to its challenging business model.