Portfolio Update
The FiveTwenty portfolio received $265.27 in dividends in the past week. BMY, T, and VZ paid their quarterly dividend during the week.
| Past Week Dividend | $265.27 |
| Current Quarter Dividend (Q2 2023) | $577.95 |
| LifeTime Dividend | $10,751.33 |
| Estimated Annual Dividend | $9,162.78 |
The capital allocation for the week of 05/07/2023 to 05/13/2023 will be used to add to our position in PepsiCo Inc (NASDAQ: PEP).
PEP – Position Update
Since our last check-in on PEP in week 9 of 2023, the company reported Q1 2023 earnings on 04/25/2023. Furthermore, the share price increased 10.4% from $175.95 to $194.27.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 50 years | 50 years | |
| Yield | 2.37% | 2.57% | 2.75% |
| Payout Ratio | 65.71%1 | 66.64%2 | |
| P/E | 27.751 | 25.962 |
1 computed using adjusted (core) EPS of $7.00 as of Q1 2023
2 computed using adjusted (core) EPS of $6.79 as of Q4 2022
Q1 2023 earnings report
Did PEP’s latest earnings report raise any warning flags?
PEP reported strong financial results for Q1 2023. The company experienced double-digit revenue growth propelled by strong growth across geographies and business segments. Overall, revenue grew 10.2%, core net income increased 15.4%, and core EPS were 16.3% higher than in Q1 2022.
| Revenue (in millions) | Core Net Income (in millions) | Core EPS . | |
| Q1 2022 | $16,200 | $1,795 | $1.29 |
| Q1 2023 | $17,846 | $2,071 | $1.50 |
| % Change | 10.2% | 15.4% | 16.3% |
Additional noteworthy developments during the quarter:
- As expected, on 05/02/2023 the company declared a quarterly dividend of $1.265 per share (a 10% increase over the year ago period) payable on 06/30/2023 to shareholders of record on 06/02/2023.
Looking ahead, owing to a strong Q1 PEP revised its FY 2023 forecast upwards. The company now expects organic revenue growth of 8% (previously 6%) and core EPS growth of 9% (previously 8%).
Thesis
Why are we adding to our position in PEP?
Strong Q1 2023 results, increased our confidence that the 10% increase in the quarterly dividend does not put the long-term sustainability of the dividend at risk. Therefore, we are adding to our position ahead of the upcoming ex-dividend date of 06/01/2023.
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