Portfolio Update
The FiveTwenty portfolio received no dividends in the past week.
| Past Week Dividend | $0 |
| Current Quarter Dividend (Q1 2023) | $746.87 |
| LifeTime Dividend | $8,855.31 |
| Estimated Annual Dividend | $8,142.60 |
The capital allocation for the week of 02/26/2023 to 03/04/2023 will be used to add to our position in PepsiCo Inc. (NASDAQ: PEP)
Decrease in Estimated Annual Dividend
This week the FiveTwenty portfolio once again saw the Estimated Annual Dividend decrease week over week. (Previous decrease) The decline was caused by INTC reducing its quarterly payout by 66% to $0.125 per share.
What does this mean for our position in INTC? The dividend reduction brings INTC’s forward yield down to 1.99% based on share price of $25.14 at close on 02/24/2023. The new yield is considerably below our desired target and given that INTC is facing some tough quarters going forward we will close out our position in INTC and re-invest the capital over the following 2-3 weeks.
PEP – Position Update
Since our last check-in on PEP in week 8 of 2023, there have been no new developments. The share price declined slightly from $176.28 to $175.95.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 50 years | 50 years | |
| Yield | 2.57% | 2.57% | 2.76% |
| Payout Ratio | 66.64%1 | 66.64%1 | |
| P/E | 25.961 | 25.961 |
1 computed using adjusted (core) EPS of $6.79 as of Q4 2022
FY 2022 earnings report
Did PEP’s latest earnings report raise any warning flags?
We discussed PEP’s FY 2022 earnings report in our previous update. Overall, revenue grew 8.7%, core operating profit increased 7.9%, and core EPS were 8.4% higher than in FY 2021.
| Revenue (in millions) | Core Operating Profit (in millions) | Core EPS . | |
| FY 2021 | $79,474 | $11,414 | $6.26 |
| FY 2022 | $86,392 | $12,325 | $6.79 |
| % Change | 8.7% | 7.9% | 8.4% |
Additional noteworthy developments during the quarter:
- On 02/09/2023 as part of the earnings report PEP announced a 10% increase in its quarterly dividend starting with the June 2023 payment.
Looking ahead, the company expects organic revenue growth of 6% and core constant currency EPS growth of 8% for FY 2023.
Thesis
Why are we adding to our position in PEP?
With no new developments since our previous updated, our thesis remains the same. We are using this weeks capital allocation to add to our position in PEP ahead of the ex-dividend date of 03/02/2023.
Previous Articles
Photo by Sam Cumming on Unsplash
One Reply to “2023 Week 9: PepsiCo Inc (NASDAQ: PEP)”
Comments are closed.