PEP is undervalued at $128 vs $180 fair value; >40% upside expected despite headwinds from tariffs, lower disposable income, and health trends.

The next stock I will highlight as an undervalued dividend stock that you can buy is PepsiCo . Remember that PepsiCo doesn't just sell drinks, it sells snacks too. In fact, the snack food sector is thriving just as much as the beverage sector, and perhaps even better.

I calculated a fair value for PepsiCo stock of $180. The current market price is $128. Therefore, I calculated the possibility of PepsiCo stock rising by more than 40%.

Now , PepsiCo is facing similar headwinds to those faced by McDonald's.

Macroeconomic headwinds, tariffs, and lower disposable income for individuals will negatively impact PepsiCo in 2026. Healthier consumer choices also significantly affect PepsiCo .

Salty snacks and sugary drinks are at the heart of Pepsi's product portfolio. Consumers are turning away from these types of options.

Like McDonald's, PepsiCo will need to shift towards healthier options in its product portfolio to counter this changing consumer trend.

High-income consumers are doing very well because asset prices are rising, and they are seeing an increase in their overall wealth due to rising stock, home, and asset prices. Artificial intelligence contributes to accelerating the pace of asset valuations for that upper class.

On the other hand, low-income earners—or rather, I should say the lower class, low-income earners—have less disposable income because their living costs are increasing at a faster rate than their wages are growing.

Therefore, they are making difficult choices that affect these four companies I mentioned, because they are consumer-oriented companies and are facing headwinds as consumers move towards cheaper options .

Consumers are choosing to reduce their consumption of these products, and therefore these headwinds are affecting all four companies.

Of course, if you are an investor looking for dividends, you are looking for a good return, and these four companies offer attractive returns, with General Mills leading the way at 7.2%, followed by PepsiCo at 4.5% , Procter & Gamble at 3%, and McDonald's at more than 3 %.

Furthermore, I think it is reasonable to assume that these companies will continue to increase their dividend payouts for many years to come. Thus, not only will you receive a certain amount of dividend income this year, but it is likely to be even greater next year, and even greater the year after that, and so on for many years to come.

Therefore, I believe these are four undervalued dividend stocks that investors can buy now and hold perhaps forever or for decades without having to sell them, and simply benefit from the dividend income .