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Pepsi Out With Refreshing News


The Board of Directors approves dividend increase, authorizes $15 billion common stock repurchase.


Guess whose house was without power from Saturday afternoon until Sunday night at 10:00 p.m.? When is this rain going to stop?

Asian markets ended mixed. The Hang Seng was off 0.62%, but the Nikkei closed up a smidge, 0.01%. However, European stocks were lower this morning. And here in the US, we're currently trading lower.

Here's what I'm focused on this Monday morning:

Is this really a good time to drill into brick-and-mortar retailer?

In case you didn't see it, Barron's gave the North Carolina company a little bit of ink that may drum up some chatter among traders and retail investors this morning.

My thoughts on the home-improvement retailer and the business in general:

1. If you follow this column then you know that despite all the love the homebuilders have been getting lately, I'm not exactly their biggest fan. That's because I still think the market for new homes is, and will continue to be sketchy.

2. But with warmer weather (hopefully) just a month or two down the road, average folks are going to be taking on more projects around their homes and perhaps be a little more willing to tap their wallets than at this same point last year.

3. Does this mean that Lowe's and its arch nemesis Home Depot (HD) are going to be rolling in it? I wouldn't go that far. But I sure feel more comfortable with its prospects now than I did three or six months back. And with estimates on the way and it having come off a better-than-expected quarter, I think a lot of eyes are going to be looking its way.

4. I wouldn't be surprised to see it in the upper $20s a few months out.

Pepsi (PEP):
It is the "real thing."

The cola company was out with some exciting news this morning. Per the release:

The Board of Directors of PepsiCo approved a 7 percent increase in the annual dividend on PepsiCo common stock, from the current annual rate of $1.80 to $1.92 per share, its 38th consecutive increase. The increase will take effect when the Board declares the next quarterly common stock dividend, which is currently expected to be paid on June 30, 2010 to shareholders of record on June 4, 2010.

The Board of Directors also authorized the repurchase of up to $15 billion of PepsiCo common stock through June 2013.

Some quick thoughts:

1. I'm big-time gung ho on drink companies right across the board -- from Dr. Pepper Snapple (DPS) to Coke (KO) to Pepsi -- because I think consumers will be going out and spending more money at fast-food and casual-dining restaurants, and will be more apt to load up the fridge (and the extra one in the garage) with the economy back in growth mode.

2. As far as Pepsi is concerned, I've got to think that its board wouldn't be giving the wink to a bump up in the annual dividend or to a whopping $15 billion repurchase authorization unless it thought it had a bright earnings future. I expect the stock to get a goose on the heels of this news.

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No positions in stocks mentioned.

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