PepsiCo Cuts Its Guidance. Is Its Dividend in Danger?

Soft drink and snack company, PepsiCo (NASDAQ:PEP) recently reported earnings and in doing so, also cut its guidance for the year, amid tariffs and concerns of slowing economic conditions. For fiscal 2025, the company now projects its core earnings per share to fall by 3%. Previously, it was expecting an increase in the low single digits. While that doesn’t scream huge growth by any means, it was at least positive, and now it isn’t.

Investors may especially be concerned about whether the company’s dividend is safe. Deteriorating earnings could put the company’s payout under pressure and make it difficult for it to support the dividend, much less grow it. For the first quarter of 2025, PepsiCo’s earnings per share (which is lower than its core earnings per share) totaled $1.33. That’s less than the $1.355 it pays in quarterly dividends. The company boosted its dividend by 7% this year as growing its payout over the years has made it an attractive income stock to own.

However, with the company forecasting a slowdown in business, lower earnings, and plenty of uncertainty still ahead with respect to tariffs and a possible recession, there could be some valid concerns about whether the dividend is truly safe.

While PepsiCo might not slash its dividend just yet, the rate of future increases to it may come down if its earnings don’t grow. The stock is yielding 4% right now but with a lot of potential headwinds to worry about, investors may be better off considering other dividend stocks besides PepsiCo.