Is Coca Cola's Dividend Enough To Justify Its Valuation?

Coca Cola (NYSE:KO) has grown its dividend for 52 years, but is it worth the price for investors? Many investors love Coca Cola for its 3% plus dividend yield. However, a high PE multiple leaves too much to earnings driven stock return. While you're assured a healthy dividend with Coca Cola, at such a high PE, you're betting too much on earnings growth, which in fact isn't happening. As a matter of fact, the case is quite the reverse at the moment, with earnings decelerating year on year.

Keeping these factors in mind, Coca Cola's PE is too high to appeal to someone like me, who has a short to intermediate horizon. However, an investment in Coca Cola could work  well for investors who have a really long term investment horizon.

Disclosure: I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 ...

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.