Institutional Investment in PepsiCo (PEP) Surges Amid Strong Earnings and Dividend Announcement

PURCHASE, NY—PepsiCo, Inc. (NASDAQ:PEP) continues to attract strong interest from institutional investors, with recent regulatory filings indicating significant stake increases by several major firms during the second quarter. The sustained institutional confidence follows the company’s recent earnings beat and its commitment to a robust shareholder return program.

Major Investors Boost Stakes in Q2

According to its latest filing with the Securities and Exchange Commission, Federated Hermes Inc. substantially increased its holding in PepsiCo by 18.9% in the second quarter, acquiring an additional 376,024 shares. The firm now owns 2,367,288 shares of PEP stock, valued at approximately $312.6 million at the end of the reporting period.

Other large investment firms also demonstrated increased confidence in the food and beverage giant:

• Vanguard Group Inc., already a major shareholder, raised its position by 1.3%, purchasing an additional 1,761,785 shares to hold a total of 136.9 million shares, valued at over $18 billion.

• Charles Schwab Investment Management Inc. saw a significant increase of 9.7%, adding over 2.5 million shares to its portfolio.

• Franklin Resources Inc. boosted its holdings by 19.5%, adding over 2.5 million shares.

• Norges Bank was a new entrant, acquiring a stake worth approximately $2.33 billion.

Overall, institutional investors and hedge funds own a controlling 73.07% of the stock, underscoring its status as a widely held blue-chip company.

Earnings Outperform, Dividend Confirmed

The surge in institutional ownership coincides with a positive recent earnings report. PepsiCo released its quarterly earnings on Wednesday, October 8th, reporting adjusted Earnings Per Share (EPS) of $2.29, which narrowly surpassed the analyst consensus estimate of $2.26. Quarterly revenue also edged past expectations, coming in at $23.94 billion against an estimated $23.91 billion. This represents a 2.7% increase in revenue compared to the same period last year. For the full year, sell-side analysts project PepsiCo will post $8.30 in EPS.

In a move appealing to income-focused investors, the company recently declared a quarterly dividend of $1.4225 per share, equating to an annualized dividend of $5.69 and yielding 3.9% based on recent closing prices. The dividend is payable on Tuesday, January 6th, to investors of record on Friday, December 5th.

Market Data and Analyst Outlook

PepsiCo’s stock, which trades on the NASDAQ under the ticker PEP, opened at $145.02 on Friday. The company has a substantial market capitalization of $198.29 billion. Its financial health is reflected in key metrics, including a trailing Price-to-Earnings (P/E) ratio of 27.57 and a low beta of 0.42, suggesting lower volatility compared to the broader market. The stock has traded between $127.60 and $161.50 over the past year.

Wall Street analysts have been moderately bullish on the stock following the earnings report:

• Bank of America and Wells Fargo & Company both increased their price targets to $155.00 and $154.00, respectively.

• The consensus price target for PepsiCo is currently $156.90, with a consensus rating of “Hold” based on data from MarketBeat.com, which includes seven “Buy” ratings, fourteen “Hold” ratings, and one “Sell” rating.

The company’s diversified business structure—encompassing seven key segments like Frito-Lay North America and PepsiCo Beverages North America—positions it strongly in the global beverages and convenient foods market.