Got $1,000 to Invest? Skip Coca-Cola and PepsiCo. This 4%-Yielding Dividend Stock Could Deliver a 160% Return in 10 Years.

Résumé détaillé

This lesser-known dividend stock offers a yield above 4% and a potentially powerful earnings growth catalyst that could help it outperform Coca-Cola and PepsiCo over the next decade.

Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP) are two of the most recognizable dividend stocks. Both are Dividend Kings, as companies with over 50 years of annual dividend increases. They also currently offer higher yields than the average stock.

However, their current valuations and relatively modest earnings growth prospects could limit their returns over the next decade. Investors looking for a better combination of income and growth might want to consider another familiar food company: McCormick (NYSE:MKC). It currently yields more than 4%, and its transformative acquisition of Unilever's (NYSE:UL) food business could help grow a $1,000 investment to around $2,600 over the next decade, a 160% return. That's higher than the projected returns of both Coke and Pepsi.

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Coke and Pepsi are incredible businesses. Coke is performing especially well these days. The beverage giant's revenue grew 7% in the third quarter, supported by 5% growth in global unit case volume. That helped drive an impressive 11% increase in its comparable earnings per share (EPS). The beverage giant's strong showing gave it the confidence to raise its full-year outlook. It now expects to deliver at least 5% organic revenue growth and 11% comparable EPS growth in 2026.

The problem with Coke is that it's trading at a premium valuation. At its recent price of $97 per share, Coke trades at 29x earnings. That's above both the S&P 500 (22.4x) and Nasdaq-100 (27x). It's why Coke's dividend yield is currently down to around 2.2% despite its continued growth.

Pepsi is not performing quite as well as Coke these days due to headwinds facing its North American business. While its revenue rose 5.6% in the third quarter, core EPS rose only 2%.

Due to its headwinds…

McC…

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