Coca-Cola Stock Dividend: What Investors Need To Know Now

Coca-Cola (KO) is one of the most storied dividend payers in the entire stock market. The company has paid a quarterly dividend continuously since 1920, and for the past 57 years, it has paid increasing dividends each year.

That makes Coca-Cola a member of the exclusive list of the Dividend Aristocrats, a group of 57 stocks in the S&P 500 Index with 25+ consecutive annual dividend increases. Coca Cola stock also has a current yield of 3%, which is significantly higher than the ~2% current yield of the broader S&P 500 Index.

Because of its long history of steady dividend increases, we view Coca Cola as a blue-chip stock.

In addition, Coca-Cola is also a member of the Dividend Kings, an even smaller group of just 27 stocks that have increased their dividends for at least 50 consecutive years. Given this, Coca-Cola is owned by many investors that want a safe and growing dividend.

But for this to be the case, the company’s ability to pay the dividend – and raise it over time – must be sustainable. To that end, this article will take a closer look at Coca-Cola’s ability to grow its payout in the coming years.

Business Overview

Coca-Cola is a pure-play beverage giant on a scale that is unlike any other. The company’s very long operating history and steady growth have afforded it the ability to scale and acquire new brands over time, and today, it produces about $37 billion in revenue. It should be noted that a multi-year effort to re-franchise formerly owned bottling operations has cut the top line in a bid to boost margins and reduce capex needs in recent years. Even so, Coca-Cola is one of the largest companies in the US market, trading with a market capitalization of $229 billion.

(Click on image to enlarge)

Source: Investor relations

Coca-Cola’s portfolio includes an astounding 4,300 products that are sold worldwide. It has its core Coca-Cola brand, as well as popular favorites like Sprite, Diet Coke, and others. However, Coca-Cola’s growth in recent years has come from brand extensions, like flavored Coke and Diet Coke products, as well as its massive and growing portfolio of non-sparkling beverages. In addition, the company has acquired and built brands in non-sparkling categories like tea, dairy, coffee, and sports drinks to diversify away from flagging global sparkling beverage sales.

Coca-Cola has also spent tremendous amounts of money in recent years on low and no-sugar drinks. In all, it launched 600 new products in 2018, and more than 250 of them were low or no sugar. In addition, of the 600 new products, more than two-thirds were non-sparkling beverages.

(Click on image to enlarge)

Source: Investor relations

Not only has Coca-Cola built a highly diversified revenue stream in terms of product mix, but it is also very well diversified globally. Only 20% of the company’s revenue is derived from North America, with the balance of 80% coming in roughly equal parts from the rest of the world. Coca-Cola sells in nearly every country on the planet, and has strong market share just about everywhere.

And of particular interest to dividend investors, Coca-Cola returns billions of dollars to shareholders each year via cash payouts and share repurchases. This global network of revenue distribution opens Coca-Cola up to significant currency risk, but over the years, it has managed to hedge away some of that risk, and accept the rest.

1 2 3 4
View single page >> |

Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.