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Something's Cooking…
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Coca-Cola KO ( ▲ 1.86% ) and PepsiCo PEP ( ▲ 2.24% ) have long been favorites among dividend investors.
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✱ But a familiar name from the spice rack is making a rather interesting case for itself.
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McCormick MKC ( ▲ 1.19% ) .
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The company behind French's mustard, Frank's RedHot, and Old Bay is preparing for a major expansion.
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→ So let's put McCormick, Coca-Cola, and PepsiCo to a $1,000 test.
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Which could deliver the highest return by 2036, assuming all dividends are reinvested?
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And what's McCormick adding to the recipe that Coke and Pepsi might be missing?
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Let's see. ⇩
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A History of Generosity …
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Coca-Cola, PepsiCo, and McCormick have spent decades earning their places in American kitchens.
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Now, let's run a hypothetical $1,000 test.
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$1,000 invested in each company — Coca-Cola, PepsiCo, and McCormick — with every dividend reinvested and the shares held until 2036.
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No trading. → Just ten years to see how the numbers stack up.
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Here's how the investments could turn out:
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→ McCormick (MKC): $2,586 — a projected 159% total return.
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→ PepsiCo (PEP): $2,341 — a projected 134% return.
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→ Coca-Cola (KO): $1,771 — a projected 77% return.
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!!! AGAIN, these are hypothetical projections, not promised returns.→ The results depend on assumptions about earnings, dividends, and future stock valuations.
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And there's a curious detail in the recipe.
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The model assumes McCormick's underlying earnings grow just 4% annually, compared with 5% for PepsiCo and 5.5% for Coca-Cola.
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Yet McCormick comes out ahead.
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How does the slowest-growing company end up with the highest projected return?
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1) Part of the answer lies in what investors are paying for each company's earnings today.
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2) The other part involves a deal that could dramatically change McCormick's business.
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And it's considerably bigger than a new bottle of hot sauce. ↓
* Sources: Matt DiLallo, November 14, 2026. Valuation multiples for 2036 are hypothetical assumptions, not market forecasts.
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More Than a Pinch…
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McCormick is preparing to become a much bigger food company.
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The spice maker plans to combine with Unilever's food business, bringing brands like Knorr and Hellmann's under the same roof as French's, Frank's RedHot, and Old Bay.
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And this is no small addition to the pantry.
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→ McCormick generated roughly $7 billion in annual revenue last year.
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→ The combined business is expected to generate approximately $20 billion annually.
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That's nearly three times McCormick's previous revenue base.
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Management also expects $600 million in synergies — savings and other financial benefits from combining operations, eliminating overlapping costs, and using the companies' scale more efficiently.
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On paper, there's plenty to like about the arithmetic.
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But combining two large food businesses is considerably more complicated than combining their shopping lists.
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Unilever's food division is roughly twice McCormick's size. Bringing the businesses together will require integrating operations, managing debt, and delivering the savings management has promised.
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And the projected returns in our $1,000 test assume the deal eventually delivers an additional 15% boost to McCormick's earnings per share.
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!!! That's an assumption, not a result.
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The merger gives McCormick a potential path to higher earnings. It also gives the company a much bigger job to execute. ↓
* Sources: Matt DiLallo, November 14, 2026. Valuation multiples for 2036 are hypothetical assumptions, not market forecasts.
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Worth Every Penny?
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McCormick's merger could help its earnings. But there's another reason it comes out ahead in our $1,000 test.
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The starting price.
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Coca-Cola trades at roughly 29 times annual earnings, compared with 17 times for PepsiCo and 15 times for McCormick.
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That ratio is called the price-to-earnings multiple (P/E). It measures how much investors pay for each dollar of a company's annual profit.
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And the model assumes those valuations will look rather different in 2036.
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→ Coca-Cola: 29× earnings today, falling to 23× in 2036.
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→ PepsiCo: Roughly 17× today, remaining at 17×.
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→ McCormick: Roughly 15× today, rising to 17×.
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In other words, the model assumes investors will eventually pay less for each dollar of Coca-Cola's earnings and more for each dollar of McCormick's.
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That can make a substantial difference over ten years, even when the underlying businesses continue growing.
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There's also a useful reminder in McCormick's latest results.
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Its third-quarter sales rose 17.4%, but organic sales — growth excluding acquisitions and other adjustments — increased just 1.9%.
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Much of the reported growth came from an acquisition rather than existing operations.
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So the 2036 projection rests on several things going right: the merger delivering additional earnings, dividends continuing to grow, and investors assigning McCormick a higher valuation.
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A cheaper starting price helps the arithmetic. The business still has to deliver. ↓
* Sources: Matt DiLallo, November 14, 2026. Valuation multiples for 2036 are hypothetical assumptions, not market forecasts.
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The Secret Is in the Ingredients…
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McCormick doesn't need to outgrow Coca-Cola or PepsiCo to outperform them on the stock market.
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At least, that's what the math suggests.
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A lower starting valuation, reinvested dividends, and a successful merger could do much of the heavy lifting.
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But there's a catch.
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A $20 billion food empire is easier to assemble on a spreadsheet than in the real world.
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McCormick still has to make the merger work. And investors have to decide what those future earnings are worth.
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The lesson? Even the best recipe depends on what goes into it.
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And when it comes to investing, the price of the ingredients matters just as much as the finished dish.
* Sources: Matt DiLallo, November 14, 2026. Valuation multiples for 2036 are hypothetical assumptions, not market forecasts.
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Don’t forget to cast your vote 👇
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Poll of the day:
Can the AI boom keep funding itself without Jensen Huang at the center?
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Disclaimer: This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills.
This publication is for informational and educational purposes only. It does not constitute investment, trading, or financial advice and is not based on any individual’s financial circumstances, goals, or risk tolerance. We are not registered investment, stock, or commodity advisors. Always consult a licensed financial professional before making investment decisions.
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Information provided in this newsletter (and on any affiliated website) is obtained from sources believed to be reliable; however, accuracy and completeness cannot be guaranteed. Opinions expressed are those of the authors and are subject to change without notice.
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