Dividend Stock Analysis: The Coca-Cola Company

As Christmas is approaching, the sounds of the music rings in that the year is almost over. I am still sitting on a sizable cash position that I am looking to deploy into an undervalued dividend stock – the one with the right metrics, that shows undervaluation, is performing better than the past, etc. Furthermore, there are investors who have capital built up, including myself, and I never like to let cash sit idle. Given this, I am constantly trying to find the right company, to invest my money, to gain value and build a dividend income stream. In my attempt to find a consumer-based company, one that will generate significant volume and revenue when economic times are good and bad, I turned to an iconic branded company. This iconic branded company has been around for 130+ years and is also coined as one of the “Dividend Aristocrats”, having increased their dividend for 25+ years. In fact, this iconic company has delivered a streak of 55+ years of increasing their dividend. Yes, I am talking about The Coca-Cola Company (KO).

The Coca-Cola Background

  • One of the longest-company histories, dating back to 1886.
  • Coca-Cola remains one of the most iconic brands, with their Coke products, as well as Dasani water, Minute Maid, Sprite, Vitamin Water, to name a few.
  • Coca-Cola is expected to deliver close to $8 billion in net earnings in 2018, via their bottle restructuring, as well as their zero-based budgeting program.

What is the current story on Coca-Cola? Well, they have been in the discussions of big brand companies faltering a bit. Declining revenues and increased competition, such as Pepsi (PEP), they have had a fun battle as of late, to maintain their market share in the beverage space. From 2015-2017, they have watched revenues and net income decline, each and every year. What has happened in that time frame? Consumer tastes have shifted from sugary drinks to energy-based beverages and more nutritional tastes; causing a decline in Coke’s revenues. Further, Coke has been on an acquisition spree, buying Honest Tea, Monster beverage, Suja-life and recently announced – Costa Coffee (in England). Additionally, their stock price in 2018 alone has actually increased 7%, from $45.88 to $49.09 (as of 12/7). Very interesting, indeed.  Therefore, I’ll go through their recent earnings release, which will cover 9 months ended September 30th and see if their financial performance is strong and, of course, their dividend metrics meet the qualifications that I seek. Before investing, I want to see an increase in revenue/earnings and an increase in liquidity, if possible. For the dividend metrics, outlined below, I would like to see if they fit each criterion established.

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Disclaimer: I do not recommend any decision to the reader or any user, please consult your own research. Thank you.

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