The Coca-Cola Company Boosts Quarterly Dividend 2.6% (KO)
By: Ned Piplovic,
The Coca-Cola Company’s (NYSE:KO) quarterly dividend boost is just the latest increase in the company’s streak of consecutive annual hikes that extends nearly six decades.
While Coca-Cola failed to beat Wall Street analysts’ fourth-quarter earnings estimates — which resulted in a 10% share price drop over three trading days — the company continues to reward its shareholders with rising dividend income distributions.
As a component of the S&P 500 Index with a minimum market capitalization of $3 billion and at least 25 years of consecutive annual dividend boosts, The Coca-Cola Company is one of just 57 companies that currently meet the requirements for a Dividend Aristocrats designation. Within this select group of top performers, in terms of consecutive annual dividend growth, there are just six companies whose current dividend hike streak exceeds Coca-Cola’s record of 57 consecutive years.
In addition to boosting its annual dividend payout amount for nearly six decades, Coca-Cola is also rewarding its shareholders with an above-average dividend yield. While the recent share price drop had a sizeable impact on total returns for existing shareholders, the price decline created an opportunity for new investors to take a long position at currently discounted rates and benefit from industry-leading dividend yield.
As always, interested investors should perform their own analysis to confirm that Coca-Cola has indeed continued growth potential and that the stock is a good fit within the investor’s overall portfolio strategy. Investors that confirm the growth potential and investment strategy fit, should make their move before the March 14, 2019, ex-dividend date. The Coca-Cola Company will distribute the next round of its quarterly dividend distributions on the April 1, pay date to all investors who claim share ownership prior to the ex-dividend date.
The Coca-Cola Company (NYSE:KO)
Headquartered in Atlanta, Georgia, and founded in 1886, The Coca-Cola Company manufactures and distributes various nonalcoholic beverages. The company offers finished products for market distribution, such as bottled water, sports drinks, juices, teas, coffee and energy drinks. Additionally, the company provides concentrates, syrups, beverage bases, source waters and powders, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores. The company sells its products in more than 200 countries under more than 350 different brands, including Coca-Cola/Coke, Fanta, Sprite, Minute Maid, Georgia, Powerade, Schweppes, Aquarius, Dasani, Simply, Glacéau, Gold Peak and FUZE TEA.
Coca-Cola’s current $0.40 quarterly dividend amount represents 2.6% enhancement over the previous period’s $0.39 dividend payout. The new quarterly dividend amount converts to an $1.60 annualized payout amount and 3.5% forward yield. This current yield is 10% above the company’s own 3.2% average dividend yield over the last five years.
In addition to outperforming its own five-year average, Coca-Cola’s current 3.5% yield is nearly 80% higher than the 1.97% average yield of the entire Consumer Goods sector and almost 120% above the 1.62% simple average of the Soft Drink Beverages industry segment. The Coca-Cola Company has the highest current yield in the industry segment, which is also nearly 50% higher than the 2.35% simple average yield of the segment’s only dividend-paying companies. In addition to the highest yield in the segment, the Coca-Cola Company also has ownership stakes in the companies with the next two highest yields — a 28% stake in Coca-Cola FEMSA, S.A.B. de C.V (NYSE:KOF) and an 18% stake in Coca-Cola European Partners plc (NYSE:CCE).
Through the steady supply of quarterly dividend hikes, Coca-Cola has enhanced its total annual dividend payout amount at an average growth rate of 8.4% per year since 1999, which resulted in a five-fold annual dividend amount increase over the past two decades. Additionally, the company nearly doubled its total annual dividend distribution payout over the past decade. While this 6.9% average growth is slightly lower than the growth rate figure for the last 20 years, the company managed to maintain that same 6.9% average growth rate over the past five years as well.
The combination of asset appreciation and rising dividend income payouts continues to reward Coca-Cola’s shareholders with positive total returns. Over the past 12 months the company rewarded its shareholders with a total return of 8.4%. The 13.6% total return over the past three-years was more than 60% higher than the one-year return. Additionally, the shareholders realized a 37.4% total return on their investment over the past five years.
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