Question

To obtain the data above, go to the PepsiCo site and follow the sequence below: investorsShareholder Information- Dividend Information// Stock Information (Use the most cITrent data.) Do you find attractive the dividend that PepsiCo pays? Be ready to discuss. Dividend Payout Ratio This denotes the percentage of the net income per share of the corporation that is distributed dividend. Dividend paid per share Net Income/Earnings per share Case/Exercise 24 Date you completed the exercise af the last annual report, what was the dividend payout ratio for PepsiCo? fo to the PepsiCo website and follow the sequence below: For dividend information, follow the sequence discussed above. For net income per share, go to Investors- Ann ual Report- Financial Highlights (it will be in the early part of the report). Would you be happier if the dividend payout ratio of PepsiCo had been 75%? Explain.

Answer 1

The recently declared dividend for Q2 2019, was $0.955 /sh, reflecting a dividend payout ratio = DPS/EPS =

0.955/1.44 = 66.3%

1) Yes, the dividend that Pepsico pays is attractive at 66.3% payout ratio (greater than 50%)

2) No, a 75% dividend payout ratio doesn't make an investor happier. Generally, a company that pays out less than 50% of its earnings in the form of dividends is considered stable, and the company has the potential to raise its earnings over the long term.However, a company that pays out greater than 50% may not raise its dividends as much as a company with a lower dividend payout ratio. Additionally, companies with high dividend payout ratios may have trouble maintaining their dividends over the long term.