Two Banks Just Gave Up on PepsiCo. Its Dividend Hasn't Missed a Raise in 54 Years.

Research Desk · October 7, 2026

PepsiCo reports third-quarter results Thursday before the opening bell. Logo courtesy of PepsiCo, Inc. via PR Newswire.

Earnings season starts in earnest this week. One of the first big names to report is a company almost every retiree already owns, whether they know it or not.

PepsiCo reports Thursday before the opening bell. And going into the print, Wall Street has rarely felt worse about it.

In the span of two days in late September, Deutsche Bank and JPMorgan both cut the stock to the equivalent of a hold. Barclays, Evercore, TD Cowen, UBS and RBC all trimmed their price targets in the days that followed.

The shares have slid to the bottom of their 52-week range. Meanwhile, the broader consumer staples group is up for the year.

That gap is the story. When an entire sector holds up and its best-known member sinks, either something is broken, or the price has run ahead of the problem.

The Toll Booth on the Snack Aisle

Most people think of PepsiCo as a soda company. It is really a snack company that also sells drinks.

Its brands include Lay's, Doritos, Cheetos, Tostitos, Quaker, Gatorade and Mountain Dew. In 2025 the company brought in nearly $94 billion in revenue, selling in more than 200 countries.

The part most investors miss is how those chips reach the shelf. Frito-Lay runs its own trucks and largely stocks its own displays.

Think of a landlord who not only owns the building but also sends the maintenance crew. A rival snack brand has to win the grocer's favor. PepsiCo already controls the aisle.

That system is expensive to build and almost impossible to copy. It is the reason PepsiCo has been able to pay a dividend every quarter since 1965.

What the Numbers Actually Say

The most recent quarter was better than the stock price suggests. Revenue rose 6.4% to $24.18 billion, ahead of estimates.

Organic revenue, which strips out currency and acquisitions, grew 2.4%. Management said global organic volume so far this year was growing at its fastest pace since 2022.

Every international region grew revenue. The company also held its full-year outlook for 4% to 6% growth in core constant-currency earnings per share.

Earnings did miss by a penny, at $2.20 a share. But the real worry sits in one place: North America.

The One Blemish: The Chip Aisle at Home

PepsiCo's North American food business, the heart of Frito-Lay, saw revenue fall 2% last quarter. Management admitted the region was softer than it expected.

The company had cut prices on Doritos and Cheetos by as much as 15% to win shoppers back. Now, with ingredient and fuel costs rising, it is raising some chip prices again.

That reversal is what spooked the analysts. JPMorgan said the snack recovery appears to have stalled. Deutsche Bank said it had less certainty in the company's strategy for the region.

There is also a subtler pressure on the dividend itself. The payout is about 69% of expected earnings, which is comfortable, but by some estimates it roughly matches this year's free cash flow. That leaves less room than usual for a bad year.

Add in weight-loss drugs curbing appetites, cheaper store brands, and an activist investor, Elliott Management, holding about 2% of the company, and Thursday's call carries real weight.

What You Are Paying, and What Could Go Wrong

At about $126, PepsiCo trades near 16.5 times trailing earnings and about 14.5 times forward estimates. That is a discount to its own long history for a company of this quality.

The average analyst target sits near $149, roughly 18% above Tuesday's close. On top of that, shareholders collect about 4.7% a year in dividends while they wait.

One honest comparison: the 10-year Treasury now yields around 5.3%, more than PepsiCo's dividend. The case for the stock is not the starting yield alone. It is a payout that has grown every year for more than half a century, something a bond cannot do.

The bear case has a number too. If Thursday brings a guidance cut and the market decides PepsiCo deserves only 13 times earnings, the stock would sit near $112, about 11% lower than today.

The Bottom Line

PepsiCo is not a hidden turnaround story. It is one of the most recognizable businesses on earth, priced as if its best days are behind it.

The North American snack business needs fixing, and Thursday's report will show whether management has a real plan or just another round of price changes.

For an income investor, though, the setup is unusual. Pessimism is high, the yield is near the top of its range, and the company behind it has raised its dividend through every recession since the Nixon administration.

Sentiment rarely gets this low on a company this durable. Whether that is a warning or an opening is what the next few quarters will decide.