The Coca-Cola Company (KO): This Beverage Company Is A Perfect Example Of A Solid Long-Term Investment

The Alternatives

The next largest competitor is PepsiCo, Inc. (NYSE:PEP), and another significant soft-drink competitor is Dr Pepper Snapple Group Inc. (NYSE:DPS).

PepsiCo, while a smaller company, is significantly more diversified than The Coca-Cola Company (NYSE:KO), which may sway some investors. In addition to their well-known beverage business, the company also has a thriving food business that includes brands such as Fritos, Doritos, Lay’s, Sun Chips, Quaker, Cap’n Crunch, and Rice-A-Roni, among others.

As far as valuation goes, Pepsi trades at an almost identical P/E ratio (19.7) and offers almost the same dividend yield (2.8%), so for most investors it is a simple matter of preference. Both are very solid investments, I just happen to prefer the stability and historical performance of Coca-Cola.

The Coca-Cola Company (NYSE:KO) and PepsiCo dominate the market. To give you an idea of the extent of this dominance, the number three non-alcoholic beverage company in the U.S., Dr. Pepper Snapple Group (DPS), is less than 9% of the size of Pepsi, the smaller of the two leaders.

Despite its smaller size, Dr. Pepper has an extensive and well-known product line that includes such brands as Dr. Pepper, 7UP, A&W, Snapple, Hawaiian Punch, Fiji water, and Arizona tea, which is growing rapidly in popularity with their signature big cans in many flavors. Of the three companies, Dr. Pepper may have the most room for growth, with all of its business coming from North America, and no international presence as of yet. Dr. Pepper is a more risky, less-established company, although is still more stable than most stocks. If you have the inclination to kick your risk level up a notch, Dr. Pepper is worth a look. It also pays a nice 3.5% dividend yield, making it particularly attractive to income investors.

The Bottom Line

Between Coca-Cola and PepsiCo, there is no clear winner. Again, it is a matter of investor preference. PepsiCo has a more diverse array of products, and arguably more room to grow. Coca-Cola has the stability and respect of being number one, and is extremely solid while still having growth potential. Whichever you choose, Coke or Pepsi, it should provide sweet returns for generations to come!

The article This Beverage Company Is A Perfect Example Of A Solid Long-Term Investment originally appeared on Fool.com and is written by Matthew Frankel.

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