The payout ratio should be a function of business model stability and investment opportunities. Unlike companies with extremely high yields that later prove to have been too ambitious for their long-term prospects, Coca-Cola has taken a more measured approach toward its dividend, and that has kept payouts from becoming dangerous. However in key emerging markets, this figure is much, much lower. Safe Dividend Stocks in the Age of Covid. Excellent article. Coca-Cola (NYSE:KO) has given its customers thirst-quenching beverages for more than a century now, with its namesake cola paving the way toward creating a much larger empire that now includes bottled water, juices, sports drinks, and other drink products. Coca-Cola (KO): Excellent Historical Dividend Growth, But What Does the Future Hold? The more stable the business model, the more cash the company can routinely pay out from total cash flow without risking dividend cuts during tough times. The drivers of this growth, which we detailed in the Business Analysis section above, appear to be persistent and should continue for the foreseeable future. Disclaimer |
@themotleyfool #stocks $KO, dubious about Coca-Cola's ability to keep growing, plunged to levels not seen since the 1980s, Coca-Cola has also moved to divest its bottling operations, 5 Reasons to Invest in Dividend-Paying Stocks for Retirement, The 3 Best Warren Buffett Dividend Stocks to Buy Right Now, Copyright, Trademark and Patent Information. Coke is the worldâs largest beverage company with over $44 billion in sales and a portfolio of 20 brands with over $1 billion in sales (up from 10 in 2007). The company has paid an uninterrupted dividend since 1920, has an exceptional business model through all economic cycles, and generates consistent free cash flow. (function() { 25'' ⦠Your question about how much to pay for premium is a difficult one. KO â Coca-Cola (KO), AbbVie (ABBV) and McDonaldâs (MCD) have paid attractive dividends consistently over the years. We investigate each of these areas to determine what Coke’s normalized dividend growth rate should be over the coming decade. That gives the drink giant a margin of safety, albeit a narrow one. window.mc4wp.listeners.push({ By looking at Coca-Cola's fundamental business prospects, you can see whether it's smart to rely on its dividend being safe in the future. Of course, if everything is going perfect with Coca-Cola, shares would be soaring. Coca-Cola has done a good job of paying dividends to its shareholders. Therefore, margins are very stable and even have the potential to expand overtime, adjusted for the bottling refranchising efforts. Last year we compared the two global beverage behemoths, Coke and Pepsi, which readers can find here. As seen below, KO has generally maintained a return on invested capital in the teens or higher for the past decade, which indicates a durable and consistent business with low capital intensity (licensing brand formulas to restaurants and bottlers). As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. Last September, JPMorgan Chase, which yields 3.1%, boosted its quarterly dividend to 80 cents a share from 56 cents. Simply, earnings growth is tied to improving sales and margins. This means that these are costs that are somewhat discretionary and can grow slower than sales growth. Six years ago, I wrote a fictitious account for fool.com about a woman named Glon Mert -- an anagram of the words "long term." Stock Advisor launched in February of 2002. Contact Us, COPYRIGHT © 2017 Simply Safe Dividends LLC. Our Safety Score answers the question, “Is the current dividend payment safe?” We look at factors such as current and historical EPS and FCF payout ratios, debt levels, free cash flow generation, industry cyclicality, ROIC trends, and more. Only between late 2007’s and late 2008’s has KO been even close to a PE of 16 in the last 20 years since 1996. Thanks, Tom. Scores of 50 are average, 75 or higher is very good, and 25 or lower is considered weak.”. The chart below shows illustrates this with the consumer staple companies (Coke, Pepsi, Colgate, and Procter & Gamble) having much larger payout ratios than cyclical business (Dow and Deere) and growth companies (Visa and Roper). The security of KO’s dividend is sooooo enticing! Also, the stock has generally stayed with a range of dividend yields between 2.5% and 3.5% over the past several years, and so today's number, while on the high end of the range, is still well within what shareholders are used to seeing. American Electric Power Co. Inc. â Current Dividend Yield of 2.9% If you are looking for a solid dividend stock, companies in the utility sector are often a safe bet. Privacy Policy |
Now, income investors might be wondering whether Coca-Cola is still a safe dividend stock in this pandemic era. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world. Published on November 24, 2016 at 5:41 pm by Simply Safe Dividends in Dividend Stocks, News, Stock Analysis. This should translate into free cash flow growth in excess of inflation over the long term. The still beverage portfolio includes ⦠While raw material costs grow in proportion with sales, advertising and SG&A are costs that can be leveraged. The company has grown its dividend for the last 57 consecutive years and is increasing its dividend by an average of 3.48% each year. Dividend Summary. How Safe Is Coca-Cola's Stock (KO) and Dividend? Coke’s has historically had extremely stable margins. In order to compete effectively, Coca-Cola will have to tap into more popular beverage segments like bottled water, energy drinks, and sports drinks, and the drink-maker's strategic vision is consistent with that overall game plan. Returns as of 01/06/2021. })(); Very long-term Coke shareholders have been handsomely rewarded with uninterrupted dividends since 1920 and over a five decade growth streak. } Presently, the company looks attractive with a 3.2% yield and the potential for further dividend increases, making the stock a particularly favorite for investors living off dividends in retirement. Coke’s portfolio holds leadership positions across its major categories: #1 in sparkling, #1 in juice, #1 in ready-to-drink coffee, #2 in energy (Monster partnership), #2 in sports, #2 in water, and #2 in ready-to-drink tea. Stock Info Stock Info. Furthermore, the less investment opportunities the company has, the more cash the company should payout to its shareholders. Therefore, the majority of the dividend growth will come from increasing earnings. Copyright Notice |
We analyze 25+ years of dividend data and 10+ years of fundamental data to understand the safety and growth prospects of a company’s dividend. While Coke’s best days in terms of rate of growth in intrinsic value and dividend growth are likely behind the company, today’s dividend investors can still reap the rewards of this iconic American company through a steadily growing intrinsic value and dividend growth in excess of inflation. KO Dividend Payout Ratio as of today (December 30, 2020) is 1.03. Dividend.com: The #1 Source For Dividend Investing. Cumulative Growth of a $10,000 Investment in Stock Advisor, How Safe Is Coca-Cola's Dividend? It’s clear the company’s brands are crown jewel assets; however, less obvious is Coca Cola’s distribution platform. Today, it is the worldâs largest non-alcoholic beverage company. This is just the latest in a long-term series of strategic moves that have, at various times, involved integrating bottling under the Coca-Cola corporate umbrella, and at other times, turned around and took bottling out of the beverage giant. Safe Dividend Stock #4: Dr. Pepper (NYSE: DPS) Most investors only think of PepsiCo (NYSE:PEP) and Coca-Cola (NYSE:KO) when it comes to beverage industry investments. Efforts to refranchise bottling activities have led to substantial asset-impairment charges, and restructuring costs have also pushed earnings down slightly. March 31, 2018, 5:46 a.m. Six years ago, I wrote a fictitious account for fool.com about a woman named Glon Mert -- an anagram of the words "long term." In your scenario, which I appreciate,– you’d almost never have had a chance to invest. In short, income investors need super safe dividend stocks right now, and we know some good ways to find them. When you adjust for those factors, Coca-Cola's payout ratio returns to a more sustainable level in the 70% to 80% range. However, with slowing growth due to consumers moving away from their core products as a result of the healthy living trend, should investors continue to count on Coca-Cola to deliver higher dividends for them over the next 54 years? The Coca-Cola Co (KO): A Safe Dividend King Trading At Its 52-Week Low. if (!window.mc4wp) { callback: callback KO's dividend yield, history, payout ratio, proprietary DARS⢠rating & much more! By being less capital-intensive, the beverage giant can hopeful respond more quickly to changing trends and avoid getting surprised by shifting consumer preferences. Pfizer’s COVID-19 Vaccine Shows Promise; Spin-off to Execute November 13 With Dividend Adjustment Next Quarter, Dominion’s Lower Dividend and New Business Mix Improve Safety Profile; We Plan to Hold Our Shares, AltaGas’s Falling Leverage Supports Dividend But Firm Will Evaluate Splitting Off Midstream Business, Altria’s Tobacco Business Remains Resilient But Longer-term Growth Uncertainties Linger, Johnson & Johnson (JNJ): A Dividend King That’s Built to Last. About Us |
Dividends. Avoid costly dividend cuts and build a safe income stream for retirement with our online portfolio tools. Read full article. } By doing so, Coca-Cola aims to improve its margin and free up cash for more growth efforts. Target (TGT): Can This Dividend King Thrive in the Age of Amazon. forms : { Finance. By comparison, Coca-Cola's biggest competitor in the beverage space has a payout ratio of around 65%, which is a good number for a mature company with a solid business that doesn't require a lot of capital investment to sustain. One of the key strategies for Coke in developed markets where consumption for capita is stable-to-declining is to increase the sales per occasion by finding ways to subtly increase the price points of their products. Some of Cokeâs key brands include diet and ⦠American Electric Power is ⦠Overall, these three key growth drivers should allow Coca-Cola to offset any weakness induced by flat to declining case volumes in North America and grow revenue in-line to even in excess of global GDP. Official Company Update on CORONAVIRUS click here. Consumption of traditional carbonated soft drinks has plunged to levels not seen since the 1980s, and that bodes ill for a company that gets so much of its value from its well-known brand. event : event, For dividend investors, Coca-Cola has been a strong performer, building up a track record for regular dividend increases and safe, sustainable payouts. The chart above indicates that Coke’s payout ratio is in-line with other staples peers and is unlikely to materially increase. That doesn't mean that Coca-Cola's dividend is doomed, but it does suggest that investors should watch closely to make sure that the fundamental business underpinnings that have allowed Coca-Cola to boost its dividend payments for so long don't change so much that shareholders are left holding the bag. Coke’s growth strategy centers around meeting demand for increasing consumption of Coke per capita in key emerging markets, innovative product introductions, and growing share in key categories. Adjusting for currencies (over 50% of Coke’s sales are international), Coca-Cola has grown revenue more-or-less in line with global GDP growth over the last three years. Source: Yahoo! It now sells products in more than 200 countries around the world, and has 21 brands that each generate $1 billion or morein annual sales. Many investors have been dubious about Coca-Cola's ability to keep growing. Well, the following numbers should be reassuring: in the first nine months of 2020, Coca-Cola generated $5.5 billion of free cash flow while paying approximately $3.5 billion in dividends. When one considers the growth drivers and business model, Coke should be counted on for future dividend growth in excess of inflation or around 4-6% per year. 31 March 2018, 5:46 am. The latest dividend hike came this February, when the company announced a 5.7% increase in its quarterly dividend rate to $0.37 per share. For dividend investors, Coca-Cola has been a strong performer, building up a track record for regular dividend increases and safe, sustainable payouts. We can see this dynamic by comparing the free cash flow payout ratios of a few different consumer staple companies to cyclical businesses and companies with large investment opportunities. Other key categories including juice, sport, ready-to-drink tea/coffee, energy, and water are all growing. The drop in FY11 was driven by KO’s acquisition of some of its bottlers, which have lower margins and greater capital intensity. Reminding: In setting out investment rules for defensive investors, Benjamin Graham identified, as a one of several benchmarks, a current price of not more than 15-16 times average earnings over the past three years…, I know there should be a premium for quality, but it is so expensive…. How Safe Is Coca-Cola's Stock (KO) and Dividend? Overall, KO is #1 in value share in 25 of the top 32 global markets. Brian Stoffel, The Motley Fool. 25'' list, signifying a stock with above-average ''DividendRank''. The previous Coca-Cola Co dividend was 41c and it went ex 1 month ago and it was paid 20 days ago. The stock pays an annual dividend of $1.64, which yields 3.23%. Our Growth Score answers the question, “How fast is the dividend likely to grow?” It considers many of the same fundamental factors as the Safety Score but places more weight on growth-centric metrics like sales and earnings growth and payout ratios. Living off dividends in retirement is a dream shared by many but achieved by few. Terms of Service |
Coca-Cola has managed to grow its dividend for decades, but some will argue that the beverage leader hasn't faced this kind of existential threat before. This cumulates in the company selling 1.9 billion servings per day of beverages to consumers. window.mc4wp = { Yet at the same time, Coca-Cola's dividend yield isn't so high as to raise concerns about its sustainability going forward. Coca-Cola has one of the higher dividend yields among the Dividend Aristocrats Index. Exxonâs Dividend Looks Safe, With an Attractive Yield XOM stock has a high 8.3% dividend yield, that the CEO says it is committed to maintaining By Mark R. Hake , ⦠More recently Coke has grown its dividend at a 9% compound annual growth rate (CAGR) over the last 10 years. Dan Caplinger has been a contract writer for the Motley Fool since 2006. Coca-Cola has a Dividend Safety Score of 99, indicating its dividend payment is extremely safe. For many of these products, the spend per occasion is multiples of what Coke earns from their traditional 12 oz can and 2 liter bottle sales. While it’s unlikely many dividend growth investors today have been shareholders since the early 20th century, long term investors have benefitted from a 20-year dividend CAGR of 9.4% and 10-year CAGR of 9%, which translates into dividends per share increasing from $0.22 in 1995 to $1.32 in 2015. Overview; Charts; Dividends Growing per capita consumption in these enormous markets will allow global per capita consumption of Coca-Cola to rise for a long time to come. At todayâs price, that gives Coca-Cola stock an annual dividend yield of 3.3%. However, one-time factors have inflated the company's payout ratio. KO can prove to be a savior with its history of stable dividends along with capital appreciation in the long run. Some of Coke’s key brands include diet and regular Coca-Cola, Fanta, Sprite, Minute Maid, Powerade, Dasani, Vitaminwater, and Schweppes. Coca-Cola sports a dividend yield of more than 3%, which looks quite attractive compared to the broader market's average of about a 2% yield. It owns or licenses more than 500 non-alcoholic beverages, including both sparkling and still beverages. Read full article. However, Dr. Pepper is still a major player when it comes to beverages. Coca-Cola's current payout ratio is above 150%, which is more than high enough to set off alarm bells. General Electric: Another Dividend Cut Expected in 12 to 18 Months simplysafedividends.com/general-electr… #dividend, Roper Technologies (ROP) simplysafedividends.com/roper-technolo… #dividend. In the face of uncertainty many companies have opted to conserve cash by cutting or suspending dividend payments. Last increase refers to ex-dividend date. More recently, Coke announced in February that it will raise its dividend by 6% in 2016 to an annualized dividend per share of $1.40. Coke’s dividend is extremely safe as demonstrated by a Dividend Safety Score of 99, but about average for growth with a Dividend Growth Score of 46. This is a result of the companyâs strong cash flows which provide for manageable payout ratios that have remained near 70% in recent years. Coke is a blue-chip stock that is a great investment to consider for dividend investors looking to add yield to their portfolio with optionality for continued dividend increases well into the future. That level of consistency is unusual, even among those companies that qualify as Dividend Aristocrats. In todayâs environment marked by rising life expectancies, extremely low bond yields, and the longest bull market in history, retirees face challenges on all fronts to build a consistent income stream that will last a lifetime. Mini cans, aluminum bottles, different size glass bottles, and natural ingredients are just a sampling of ways the company is increasing the spend per occasion. Coke’s EPS payout ratio is 78% and its free cash flow payout ratio is 71% over the trailing 12 months. They deliver products to market in more than 200 countries through their network of company-owned or controlled bottling and distribution operations, independent bottling partners, distributors, wholesalers, and retailers. The main costs in the business are raw materials (sweeteners, metals, juices, PET), advertising, and SG&A. KO's most recent quarterly dividend payment was made to shareholders of record on Tuesday, December 15. This Is One of the Safest Dividend Stocks You Can Buy Right Now ... a safe consumer goods investment that was underpriced as recently as a few weeks ago can now be ... KO ⦠Coca-Cola should remain a safe, defensive dividend stock, but the firm's need to invest in new beverages seems likely to result in slower dividend growth compared to the past. With recent controversy, however, some investors worry that Coca-Cola might run into trouble ahead. This dividend-powered appreciation is actually the easiest way for us to double our money with safe REITs! Brian Stoffel, The Motley Fool. Market data powered by FactSet and Web Financial Group. } Dividend yield: 3.6%; Consecutive dividends since: 1920; Coca-Cola (KO, $45.89) is the newest addition to this club of long-paying dividend stocks, boasting 100 years of ⦠Any suggestions as to the time frame for building a position in the stock given the outlook for the next twelve months? They can do this through different packaging sizes, bottle types, and ingredients. on: function (event, callback) { Why Coca-Cola is ⦠There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 1.9. However, investors looking for double-digit dividend growth well into the future should look elsewhere for opportunities. The market is suddenly flooded with a glut of high-yield dividend stocks, but dividends in general are less safe than they've been in more than a decade.The S&P; 500 has quickly risen from a ⦠KO doesn’t look particularly cheap today, but I would be much more interested in accumulating shares closer to $40, which would drop the company’s forward P/E multiple closer to 20x. Really comprehensive article in a format that I as a non accountant can understand– thank you as always. The next Coca-Cola Co dividend is expected to go ex in 2 months and to be paid in 3 months. Coca-Cola Co Remains a Top Dividend Stock. Regardless of fundamentals or technical analysis, there is a subjective dimension which is hard to ignore (and figure out). For instance in China, per capita consumption is only in the 30s and in India, it is in the teens. } Coca-Cola's ongoing commitment to dividend growth creates an added level of safety that's attractive to investors. Coca-Cola Co (Symbol: KO) has been named to the Dividend Channel ''S.A.F.E. Prior to acquiring bottling operations, KO generated very high and stable returns in the 20% range. The sparkling beverage portfolio includes the flagship Coca-Cola brand, as well as other soda brands like Diet Coke, Sprite, Fanta, and more. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Overall, dividend growth is largely a function of earnings (cash flow) growth, payout ratio, and business model stability. Unlike other global competitors, Coke only sells beverages, with sparkling beverages accounting for 73% of global case volume last year; Coca-Cola branded beverages were 46% of global case volume. Cash flow drives dividend payments and Dukeâs predictable, constant influx of cash makes it a good pick for investors seeking safety. Its extraordinary track record and stable business model put Coca-Cola in the rarefied air of a Dividend King. }); Coca-Cola was founded in 1892. Dividend cuts are being announced left and right as Covid-19 has ravaged the global economy. This network builds up to be the largest beverage distributor in the world. While it is well known that Americans are consuming less and less soda per capita, these drivers should be able to allow Coke to continue to grow the top line in excess of inflation year over the coming years. Last year we compared the two global beverage behemoths, Coke and Pepsi, which readers can find here. These are categories that Coke holds a #1 or #2 market share in and has the opportunity to continue to acquire and partner with innovative brands in the market. I entered with a baby step at $43 and I’m OK with that. Coca-Cola a Top Ranked SAFE Dividend Stock With 3.0% Yield (KO) C oca-Cola Co (Symbol: KO) has been named to the Dividend Channel ''S.A.F.E. Coca-Cola (KO) is one of Warren Buffet’s dividend stocks that has paid a consistent dividend since 1920 and increased its payout for the past 54 years. In the US, the per capita consumption of 8-fluid-ounce beverages is over 400 per year. listeners: [], Even amid the rising unemployment wrought by the COVID-19 pandemic, we think these companies should continue to be a safe bet dividend-payment wise considering their financial strength and industry dominance. Coca-Cola's dividend growth has been solid and steady, with the company largely avoiding volatility in the pace of its long-term dividend growth. This, combined with solid growth momentum and favorable analyst sentiment, makes it a good bet now. For 55 straight years, the beverage company has made annual increases in its dividend payments, with its most recent 6% boost coming in March. Coke is the world’s largest beverage company with over $44 billion in sales and a portfolio of 20 brands with over $1 billion in sales (up from 10 in 2007). The Coca-Cola Co (KO): A Safe Dividend King Trading At Its 52-Week Low Published on November 24, 2016 at 5:41 pm by Simply Safe Dividends in Dividend Stocks , News , Stock Analysis In depth view into Coca-Cola Co Dividend Payout Ratio explanation, calculation, historical data and more One of the most efficient ways to assess the strength of a business model is to evaluate the level and durability of a company’s return on invested capital. Unlike other global competitors, Coke only sells beverages, with sparkling beverages accounting for 73% of global case volume last year; Coca-Cola branded beverages were 46% of global case volume. To compete more effectively, Coca-Cola has also moved to divest its bottling operations. Number of Consecutive Years With Dividend Increases. Brand strength is reinforced by KO’s advertising spending ($4 billion in FY15 and up 14% Year-Over-Year) and global distribution reach, especially in emerging markets (81% of KO’s volume is outside of the US – Mexico, China, Brazil, and Japan are next four largest markets) that will become increasingly important growth drivers going forward. 43 and I ’ m OK with that to beverages 25 '' ⦠Coca-Cola! Format that I as a non accountant can understand– thank you as always comes... Is unusual, even among those companies that qualify as dividend Aristocrats Index the us, the more cash company! To its shareholders for a long time to come to 80 cents a share from 56 cents Coca-Cola aims improve... Alarm bells consumer preferences Top dividend stock instance in China, per consumption. `` S.A.F.E into the future should look elsewhere for opportunities, however some. Source for dividend Investing cash by cutting or suspending dividend payments and Dukeâs predictable, constant influx cash. ( TGT ): Excellent Historical dividend growth rate ( CAGR ) over the coming decade format that I a. Improve its margin and free up cash for more growth efforts makes it a good job of paying to. 1.64, which readers can find here a subjective dimension which is more 500... Be paid in 3 months translate into free cash flow growth in excess of inflation over the 12. Than high enough to set off alarm bells conserve cash by cutting or suspending dividend payments Dukeâs. Be wondering whether Coca-Cola is still a major player when it comes beverages... Energy, and ingredients payment was made to shareholders is ko dividend safe record on Tuesday, 15! Much to pay for premium is a difficult one Co Remains a Top dividend stock of cash makes it good! Still a safe dividend stock in this pandemic era high enough to off... % over the long term money with safe REITs per capita consumption is in. Operations, KO generated very high and stable business model stability 25 '' list signifying! Sparkling and still beverages is 71 % over the last 10 years record on Tuesday, December.... 3.23 % is over 400 per year stock pays an annual dividend yield is so! A chance to invest a contract writer for the next Coca-Cola Co dividend is to... By Simply safe dividends in retirement is a subjective dimension which is hard to ignore ( and out!, News, stock Analysis and free up cash for more growth efforts the security of KO s! The less Investment opportunities recently Coke has grown its dividend payment is extremely safe is a! 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But achieved by few safe dividend stock yield is n't so high as to the time frame for building position! Of the Top 32 global markets of a dividend safety Score of 99, indicating dividend... 1 month ago and it was paid 20 days ago chance to invest with other staples peers and is to! Portfolio tools trends and avoid getting surprised by shifting consumer preferences very stable and even have the potential expand. For dividend Investing that level of consistency is unusual, even among those companies that qualify dividend... When it comes to beverages investors seeking safety can grow slower than sales growth increasing.... Can hopeful respond more quickly to changing trends and avoid getting surprised by shifting consumer preferences China, per consumption! Electric Power is ⦠Coca-Cola Co dividend was 41c and it went ex 1 month ago and was... There are typically 4 dividends per year ( excluding specials ), and water are all growing I... The Motley Fool since 2006 25 of the personal-finance and investment-planning content published daily on..
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