Key Takeaways
- PepsiCo cut its fiscal 2026 core EPS growth outlook to 2.5% to 3.5% on Oct. 8, and its stock yields 4.7% against Chevron’s 3.4%.
- At each company’s 5-year dividend growth rate, $10,000 in PepsiCo would pay about $19,123 over the next 20 years, against about $12,240 for Chevron.
- Chevron’s dividend took 51% of its free cash flow over the twelve months to June 30, 2026, against 75% for PepsiCo over the twelve months to Sept. 16, 2026.
- Chevron’s coverage leans partly on today’s oil prices, and PepsiCo’s on fixing its North American beverage business.
PepsiCo (PEP) cut its 2026 outlook on Oct. 8. It now expects core EPS to grow 2.5% to 3.5% this year, down from the low end of 5% to 7%, and its stock still yields 4.7%.
That’s well above the 3.4% on Chevron (CVX), whose second quarter of 2026 brought $18.1 billion of free cash flow, against $4.9 billion a year before.
So if I can put my dividend dollars in only one of them for the next 20 years, which one gets them?
| Metric | Chevron (CVX) | PepsiCo (PEP) |
|---|---|---|
| Dividend yield | 3.4% | 4.7% |
| Annual dividend | $7.12 | $5.92 |
| Dividend growth, fiscal 2020–2025 | 5.8% a year | 6.9% a year |
| Cash dividend payout ratio (TTM) | 51% (to June 30, 2026) | 75% (to Sept. 16, 2026) |
| Net debt/EBITDA (LTM) | 0.56x | 1.89x |
| Interest coverage (LTM) | 18.93x | 14.88x |
| Forward P/E (NTM) | 12.6x | 15.0x |
Source: TIKR and StockAnalysis, Oct. 9, 2026.
Chevron has room to spare right now
Chevron is pumping more, as its production rose 20% in the second quarter of 2026 from a year before, driven by the Hess acquisition and growth in the Permian Basin and Gulf of America. Chairman and CEO Michael Wirth said on the July 31 call that the Hess assets’ free cash flow “has been roughly double the incremental dividends.”
Over the twelve months to June 30, 2026, the dividend took a well-covered 51% of free cash flow: $13.86 billion paid against $27.01 billion. That single quarter did a lot of the work, since fiscal 2025’s ratio was a tighter 76.9%.
Over the past decade, the cushion has swung with oil. Free cash flow fell short of the dividend in fiscal 2016 and fiscal 2020, then covered it every year from fiscal 2021 to fiscal 2025…
…and Chevron kept raising the dividend through all of it. As management put it on the May 1 call: “And this year, we’ve grown it for the 39th consecutive year.”
The main risk for Chevron is a drop in oil prices. By management’s own account, its 2030 targets, including adjusted free cash flow growth averaging more than 10% a year, assume commodity prices stay flat at levels below today’s. Net debt of 0.56x EBITDA leaves plenty of room to ride out a bad year.
PepsiCo’s dividend has caught up with its cash
PepsiCo’s free cash flow doesn’t swing the way Chevron’s does. Over a decade it has barely moved: $7.62 billion in fiscal 2016 and $7.67 billion in fiscal 2025. Over the same years, dividends paid rose from $4.23 billion to $7.64 billion…
…which pushed the cash dividend payout ratio to a risky 100.6% in fiscal 2024 and 99.6% in fiscal 2025.
The ratio has improved since then. It was 75% over the twelve months to Sept. 16, 2026, as operating cash flow rose to $7.95 billion in the 36 weeks to Sept. 5, 2026, from $5.47 billion a year before. PepsiCo expects to pay $7.9 billion in dividends in fiscal 2026, with a free cash flow conversion ratio of at least 80%.
In the third quarter of 2026 (the 12 weeks to Sept. 5), net revenue rose 5.6% and organic revenue 3.1%, with every international segment growing. North America beverages are lagging. “We’re not satisfied with the performance in the U.S.,” Chairman and CEO Ramon Laguarta said on the Oct. 8 call. Rising input costs are squeezing margins, and net debt stands at 1.89x EBITDA, against 0.56x for Chevron.
So which dividend wins?
Chevron gets my dividend dollars for the next 20 years.
Over a stretch that long, I care more about whether the dividend can keep growing than about the size of the first check. Chevron pays out a well-covered 51% of its free cash flow, carries little net debt, is growing production, and has raised its dividend 39 years in a row by its own count. At its 5.8% growth rate, $10,000 would pay about $992 in year 20, a 9.9% yield on today’s cash. On its own, that’s a modest check, so you’d want to count capital appreciation as well.
To be fair, PepsiCo’s dividend isn’t in trouble. It pays $470 a year on $10,000 today, against $340 for Chevron, and at its 6.9% rate it would pay about $19,123 over 20 years, which is $6,882 more than Chevron’s $12,240. At these rates, Chevron never catches up, and PepsiCo’s coverage is improving too. Still, a dividend that grows 6.9% a year for two decades needs free cash flow that grows as well, and PepsiCo’s hasn’t since fiscal 2016.
Of course, PepsiCo says more cost cuts are coming in the months ahead. If they get its free cash flow growing again, that bigger check gets much harder to pass up.
So what is Chevron stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Chevron could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
