My Top Dividend Growth Stock to Buy in September and Hold Forever

The raise that keeps on giving

PepsiCo raised its dividend in May 2026. The quarterly payout was set to $1.48 per share, which is a 4% increase from the previous quarter and the year-ago period. The dividend policy works out to a generous 4.3% annual yield against recent prices, comparing favorably to even the best high-yield savings accounts nowadays.

But that’s not the whole story. You see, this wasn’t PepsiCo’s first dividend boost. The company is a Dividend King, which means it has raised its payouts for at least the last 50 years. The soda and snack giant’s check-boosting streak started 54 years ago, in 1972.

Image source: The Motley Fool.

Dividends did PepsiCo’s heavy lifting

In other words, PepsiCo isn’t just a consistent dividend payer, but a deeply committed dividend growth stock. The company’s free cash flows rose 131% over the last two decades. Dividends paid quintupled over the same period.

And the rich payouts make a real difference to shareholder returns. PepsiCo’s stock price rose 29% over the last decade. If you reinvested the dividends in more stock along the way, you’d have a total return of 75% instead.

PEP Total Return Level data by YCharts

The lag is the opportunity

The 10-year returns don’t look great compared with the S&P 500 (^GSPC -0.37%), whose total return has surged 319% since September 2016. Then again, PepsiCo isn’t a player in the AI boom, which drove most of the index’s outperformance in recent years.

And that underperformance is part of my investment thesis here. As of Sept. 8, PepsiCo’s stock is down 14.3% over the past six months. Coca-Cola (KO -0.56%), Keurig Dr Pepper (KDP -0.35%), and Monster Beverage (MNST -1.26%) all gained at least 13%. As a result, PepsiCo carries some of the lowest valuation ratios in the large-cap beverage sector.

That’s the Dividend King I want in my portfolio: a boring snack-and-soda machine that keeps raising the check every year, currently marked down for a September sale.