Over the past year, PepsiCo (PEP) has been making the right moves. Perhaps one of the biggest was to buy up its key bottlers in the U.S. so as to improve cost efficiencies, as well as to broaden the product mix. In fact, Coca-Cola (KO) also realized the logic of this strategy and is doing the same thing.
And keeping up the momentum, PepsiCo did something else to make shareholders happy. Monday, the company announced it has approved a 7% increase in its dividend and there a whopping $15 billion authorization to repurchase up to $15 billion in shares of the company.
True, the dividend seems a bit ordinary. After all, this is the 38th consecutive increase for PepsiCo. But, in light of the dividend cuts throughout corporate America over the past couple year, this is certainly a welcome change. Besides, this is yet another indication that confidence is slowing returning to the boardroom.
No doubt, PepsiCo is well-positioned. The company's profits continue pile-up and there is likely to be long-term growth from emerging markets.
In early trading, the shares of PepsiCo were up more than 1% to $66.26.Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.