If I Had $10,000 for 1 Dividend Grower, This Would Be It
Key Points
A struggling stock and a 54-year streak of payout hikes have PepsiCo offering a generous dividend return.
Some strategic pivots have increased revenue growth, and that could ultimately translate into stock gains.
Dividend growth stocks tend not to attract as much attention as stocks in growth sectors such as artificial intelligence. Instead, such companies tend to offer the goods or services we need in good times and bad. Ideally, this generates free cash flow to fund a dividend they can afford to increase annually.
Moreover, they often do not correlate with the general market. While they may not rise as quickly as an AI stock, the economy may not turn on them as severely during the pullback, either. Knowing that, this consumer staples stock would be my choice if I had $10,000 to invest in a dividend grower, and here's why.
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My dividend grower of choice
My dividend grower of choice is PepsiCo (NASDAQ: PEP).
PepsiCo is, of course, best known for its flagship cola drink, Pepsi. However, it owns numerous beverage and food brands. Mountain Dew, Gatorade, Lipton, Ocean Spray, and Poppi are among its beverages. The company's food portfolio centers around Frito-Lay brands like Lay's and Tostitos, but it also owns Quaker and, more recently, a healthier food brand called Siete.
As of the time of this writing, $9,968 would buy 78 shares of PepsiCo. At $5.92 per share in annual dividends this year, that would earn around $462 in 2026, a dividend yield of almost 4.5%. That exceeds the 2.4% return offered by rival Coca-Cola and is far above the S&P 500 average of 1.1%.
Furthermore, PepsiCo is a Dividend King by virtue of its 54-year streak of annual payout hikes (Dividend Kings have raised dividends for 50 or more consecutive years). Over the trailing 12 months, it has generated $9.7 billion in free cash flow. This means it could cover the $7.8 billion in dividends during that period and likely continue its annual payout hikes.
Additionally, as conditions stand now, the dividend may not be the only source of growth. As recently as 2024, revenue grew by only 0.4%. That contributed to a sliding stock price and a P/E ratio that had fallen to 17.
Nonetheless, in 2025, revenue growth rose to 2.3%, and in the first half of 2026, that rate accelerated to 7.3%. The company has reinvigorated its brands by cutting prices on some snacks. It has also emphasized healthier beverages and snacks, and secured more shelf space at grocery stores. Ultimately, such improvements could eventually translate into stock gains.
Consider PepsiCo stock
Investors looking to generate dividend income with $10,000 of capital should consider PepsiCo stock.
Although the stock has struggled and revenue growth has stagnated, PepsiCo has never had trouble maintaining its payout hikes. Moreover, thanks to the lower stock price, investors can now earn a significant dividend yield.
Furthermore, with improved revenue growth, PepsiCo could finally see its stock price recover. Hence, while it may not excite investors, this top dividend growth stock is increasingly well positioned to deliver significant returns from its payout and, over time, a rising stock price.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.