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Coca-Cola Classic

Coca-Cola Yielding Over 4%

Coca-Cola Company (KO) is now yielding over 4% due primarily to stock price declines. In my mind this means it’s a buy. The stock is one that has been overvalued for many years. There have been some opportunities to buy the stock at yields over 3% but no opportunities to buy the stock when it yielded over 4% since the Great Recession. The company has raised the dividend for 58 years making it a Dividend King. It is the global market leader in non-alcoholic beverages and continues to strengthen that position through bolt-on acquisitions and innovation. Along these lines, Coca-Cola bought Costa coffee to expand into coffee and hot beverages. Granted, the payout ratio has been high and 2020 will be a difficult year for the company due to covid-19 and transportation restrictions. But still, when a Dividend King such and Coca-Cola is yielding over 4% one has to seriously consider it. I view the stock as a long-term buy.

Overview of Coca-Cola

Coca-Cola is the largest non-alcoholic beverage company in the world that traces its roots back to 1886. The company makes and sells soft drinks, water, enhanced water, sports drinks, dairy, juices, teas, coffees, and energy drinks. It has a market presence in most of the world and has operations in over 200 countries. Coca-Cola owns many leading brands including Coke, Diet Coke, Sprite, Minute Maid, Fanta, PowerAde, Schweppes, Dasani, Gold Peak, Honest Tea, and many others. The company sells its beverages through a network of company-owned, company-controlled, affiliated, or independent bottlers, distributors, wholesalers, and retailers worldwide.

Selected Data for Coca-Cola

TickerKO
Market Cap$164.44B
Stock Price$36.27
Dividend (FWD)$1.64
Dividend Yield4.37%
P/E Ratio (FWD)17.36
Source: Data from Seeking Alpha

Coca-Cola’s Competitive Advantages Give It A Wide Moat

Coca-Cola essentially has a duopoly with its main competitor, PepsiCo Inc (PEP), which together control nearly 70% of the market. With that said, the barriers to entry are not too high for non-alcoholic beverages…

Disclosure: I am long KO.

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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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