This week, we have $375.37 in uninvested cash available, along with the usual $250+ weekly contribution. On top of that, six of our portfolio holdings ranked in the Top 10.
| Ticker | Account Value |
| BDX | 3,685.24 |
| CMCSA | 1,966.32 |
| FMCB | 4,386.40 |
| HTO | 3,305.79 |
| PEP | 1,885.26 |
| PPG | 3,333.99 |
The lowest amount belongs to PEP which last traded at $145.02. Therefore, I will acquire 4 shares on Monday. Below, is the purchase history and average cost calculation.
PEP announced quarterly earnings on 2025-10-09, just three days after we last added shares. Let’s see how this recent performance falls into the context of the last 16+ years.
Observations
Stock Price
PEP dropped from an all-time high of $196.88 on 2023-05-15 to $127.60 on 2025-06-26. Losing 35% in just over two years is concerning, but the stock price appears to have stabilized now.
Sometimes the only thing that stops a significant sell-off is good ol’ fashioned strong quarterly earnings and PEP delivered just that not only for the second quarter but also for the third quarter.
Earnings
Magnitude/Trend
Clearly, the quarterly earnings are in a strong, long-term, positive trend. The blue dotted line in the chart above actually does a decent job of delineating the overall earnings trend, even if the variation about that linear trend line is both significant and seasonal in nature.
Seasonality
Typically, the quarterly distribution of annual earnings breaks down as follows: 18.3% in Q1, 27.7% in Q2, 29.0% in Q3, and 25.0% in Q4. The variation around these percentages is minimal and are reliable.
CY2025 EPS is highly likely to be the second best ever but would simultaneously represent a low single digit decline from 2024.
Dividends
PEP is a Dividend King, with an impressive 53-year streak of annual dividend increases. Alongside this growth, however, the company’s dividend payout ratio has also been trending higher. Ordinarily, a rising payout ratio relative to earnings per share (EPS) could raise concerns about the sustainability of future dividend growth. Yet, PEP’s earnings are remarkably consistent from quarter to quarter, allowing the company to comfortably support a higher payout ratio. The rarity of earnings disappointments reinforces the company’s ability to maintain dividend safety.
From a technical perspective, the slope of the dividend growth line (green) closely tracks the EPS trend line (blue dashes), though it has been slightly more aggressive in recent years. Importantly, nothing in the latest earnings report suggests any risk to the dividend itself. That said, it is entirely possible that the pace of dividend growth may moderate going forward.
Thoughts on Investment
The trailing 12-month P/E ratio currently sits at 17.9, lower than the average of 21.0 over the 16-year period above.
It’s simple. I believe PEP has some upside and is yielding nearly 4%. The purchase on Monday will likely raise our average cost slightly. All this means is PEP has moved up a little since the position was created. I think there is still more share price appreciation in the near future.
It is still a good time to add some shares.