The Smartest Growth Stock to Buy With $10,000 Right Now

The stock market is in turmoil for geopolitical reasons that risk spilling over into kitchen table problems for everyday consumers. History suggests that this won't stop people from buying the foods they love. That's why right now is a good time to look at consumer staples giants that make food. But there's one consumer staples Dividend King that is in its own personal bear market and offering a historically high yield. It could be the one to buy if you have $10,000 to invest right now.

What does PepsiCo do?

The company in question is PepsiCo (NASDAQ: PEP). Although largely known for its namesake beverages, it operates in the beverage, snack (Frito-Lay), and packaged food (Quaker Oats) categories. It is a strong competitor in packaged food, but it is the No. 2 beverage maker and the No. 1 salty snack company. This consumer staples giant is a vital partner for retailers the world over.

Image source: Getty Images.

PepsiCo's success shows up most clearly in its status as a Dividend King. First off, it has increased its dividend annually for a huge 53 consecutive years. That doesn't happen by accident. The company has a strong business model that it sticks to in both good times and bad times. Secondly, the annualized dividend increase over the past decade was nearly 8%. That's fairly high, more than twice the historical rate of inflation growth. Put simply, the buying power of PepsiCo's dividend has grown materially in the past decade.

Right now is a bad time for PepsiCo's stock, but that's not because of the market turmoil. PepsiCo is facing headwinds in the snack category, where growth has slowed of late. And investors have pushed the stock lower because the company's top-line growth has slowed after a spike coming out of the coronavirus pandemic. That was an unusual period in which elevated inflation allowed PepsiCo to push through outsize price increases. The stock has fallen 25% from its 2023 highs, which basically means PepsiCo is in its own personal bear market. That drop has pushed the dividend yield to a historically high 3.7%.

PEP data by YCharts

PepsiCo is making the right moves to get back on track

The truth is, PepsiCo isn't going to turn its business around overnight. That's just not how things work when a company is as large and diversified as this one. However, management is making the right moves to get growth back on track. And it's using the same playbook that has been so successful over the past 50-plus years.

Times change, tastes change, and beverage and food makers have to adjust. They have to keep their brand portfolios fresh. This is exactly what PepsiCo is doing. The company benefits from its size, which allows it to act as an industry consolidator. Basically, it can buy up-and-coming brands and food concepts to refresh its product lineup.

For example, it agreed to buy Siete Foods in 2024. The deal to acquire this Mexican American food company has since closed and gives PepsiCo new products in the snack and food categories to sell. However, simply plugging the brand into PepsiCo's massive distribution network should lead to a quick growth burst. The big draw here is that Siete's products are "on target" with current consumer tastes and trends.

PepsiCo followed the Siete acquisition with an agreement to buy Poppi in 2025. Poppi is a prebiotic beverage maker. Prebiotic beverages are generally considered healthy and take advantage of another growing food trend. As with Siete, just putting Poppi into PepsiCo's distribution system should help to spur the brand's growth.

It may take time, but the foundation is being laid

You don't turn a giant ship on a dime, so don't expect PepsiCo's business to suddenly rocket forward. However, this consumer staples giant is doing the same things that have made it so successful historically. There's no reason to believe that such choices won't work out this time around. In fact, history suggests that they will get this dividend-growth machine back on the growth track again. If you buy it now, you'll get to collect that lofty dividend yield while you wait for the better days that likely lie ahead.

Should you invest $1,000 in PepsiCo right now?

Before you buy stock in PepsiCo, consider this:

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Reuben Gregg Brewer has positions in PepsiCo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.