On the surface, Coca-Cola (KO) and PepsiCo (PEP) might seem like identical companies.

They are the top-two soda companies in the U.S., and both have similar histories of raising dividends.

Both Coca-Cola and PepsiCo are members of the Dividend Aristocrats list. The Dividend Aristocrats Excel spreadsheet has 51 stocks with 25+ consecutive years of dividend increases. PepsiCo has increased its dividend for 45 years in a row, while Coca-Cola has raised its shareholder payout for 55 consecutive years. Not only is Coca-Cola a Dividend Aristocrat, but it is also a Dividend King.

The Dividend Kings Excel spreadsheet has just 19 stocks, each with 50+ years of consecutive dividend increases.

However, investors considering buying one (or both) should know that Coca-Cola and PepsiCo have vastly different business models. As a result, their future growth trajectories are much different as well. If an investor were trying to choose between the two Dividend Aristocrats, this article will compare-and-contrast Coca-Cola and PepsiCo in terms of growth potential, dividend income, and expected future returns.

Growth Potential

Winner: PepsiCo

Both Coca-Cola and PepsiCo have world-class product portfolios. They both possess at least 20 individual brands, which each generate $1 billion in annual sales. However, their brand portfolios are very different, which is why PepsiCo has better growth potential going forward.

Coca-Cola’s portfolio is diversified among different beverage products, but consists primarily of sparkling beverages, where it has over 50% global market share.

Source: 2017 CAGNY Presentation, page 15

PepsiCo has a major advantage in terms of its product focus. Its portfolio is split roughly evenly, between food and beverages.

Like Coca-Cola, PepsiCo has diversified its beverage offerings, with Pure Leaf tea, Tropicana, Gatorade, and water brands. In addition to PepsiCo’s core beverage brands, it also has a large snacks business under the Frito-Lay brand. It also has Quaker, and a selection of healthy food brands like Sabra.