The Coca-Cola Company Offers 5.4% Dividend Hike (KO)

The Coca-Cola Company (NYSE:KO) boosted its streak of annual dividend hikes to 56 consecutive years with a 5.4% dividend increase for the first quarter of 2018.

As a part of the S&P 500 Index with a market capitalization of more than $3 billion and a record of boosting annual dividends for at least 25 years, The Coca-Cola Company is one of 52 companies currently designated as Dividend Aristocrats. Even within this exclusive group, there are only six companies with longer consecutive annual dividend hikes than Coca-Cola’s 56 years.

In addition to one of the longest records of consecutive annual dividend increases, the company is rewarding its shareholders with a 3.5% yield. The Coca-Cola share price zoomed more than 16% for the 12-momth period preceding the market’s sell-off in late January. After the pullback, the company’s share price now is up slightly less than 6% in the past 12 months, but its dividend lifts its total return for that time period into the double-digit percentage range.

The Coca-Cola Company will distribute its next quarterly dividend on April 2, 2018, to all its shareholders of record before the company’s ex-dividend date on March 14, 2018.

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.

The company’s current $0.39 quarterly dividend is 5.4% higher than its $0.37 payout from the previous quarter. This new quarterly amount converts to a $1.56 annual distribution and a 3.5% forward yield, which exceeds the company’s 3.1% five-year average yield by 14.3%.

Compared to the average industry yield, Coca-Cola’s current yield is twice the 1.77% average yield of the entire Consumer Goods sector and is 136% higher than the 1.5% simple average yield of all the companies in the Soft Drinks Beverages market segment. When the average yield calculation excludes all companies that do not distribute dividends increases, the average yield of the dividend-paying companies in the market segment rises to 2.26%. Yet Coca-Cola’s 3.5% average yield is almost 57% higher. Coca-Cola’s yield is the highest yield in this market segment, with the next two highest yields belonging to Coca-Cola FEMSA, S.A.B. de C.V (NYSE:KOF) and Coca-Cola European Partners plc (NYSE:CCE), of which The Coca-Cola Company holds a 28% and 18% ownership stakes, respectively.

In addition to distributing dividends for more than a century – since 1893 – and hiking its annual dividend for more than half a century, the company has boosted its annual dividend amount at an average growth rate of 8.6% per year for the past two decades and enhanced its total annual dividend amount more than five-fold since 1998.

Generally considered a safe growth stock, Coca-Cola’s share price went through a decade-long slump between 1999 and 2009. However, the share price has been growing steadily since 2009 with some volatility and occasional pullbacks. The share price entered its trailing 12 months (TTM) riding an uptrend and rose 16.5% from its $41.67 TTM low on February 27, 2017, toward its 52-week high of $48.53 on January 26, 2018.

However, the share price lost almost 10% since the late-January peak and closed on February 26, 2018, at $44.02, which was 5.7% higher than it was one year earlier. That asset appreciation combined with dividend income to reward company’s investors with a 10.2% total return over the past 12 months, a 16.2% over the past three years and 32.3% over the past five years.

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