Top Tip: Best Dividend Stocks

Coca-Cola

Company:  Coca-Cola

Symbol:  KO

Shareholder Services company:  Computershare

Website:  www.ibm.com

Blue Chip meter (1 to 4):


Company Description

Coca-Cola is the granddaddy of all global consumer product companies.  They have been in business for 127 years and sell more than 3,500 products in over 200 countries.  Historically, KO has been considered an aggressive growth company.  Today, they have an unassailable line-up of drink brands, extensive distribution network, an extremely competent & shareholder-friendly management team, and a rock-solid balance sheet.  Everything you would want in a long-term investment.


Key Financial Metrics


Investment Analysis

  • KO launched a 2020 Vision, in 2009, with their international bottling partners to double revenues this decade.  So whereas they are a huge company today, management believe they can grow 2x from 2010 to 2020.  And given management’s outstanding record (with the exception of the New Coke debacle), this is pretty much a one-way bet in your favor.
  • Only 36% of their volume comes from Eurasia, Africa and the Pacific.  This is a huge under tapped growth potential. ·      Take a look at the dividend growth, payout ratio and cash used for share buybacks.  The total return of capital to shareholders is an excellent 72%.
  • Warren Buffet’s Berkshire Hathaway owns 9% of the company (400 million shares); Coca-Cola has raised its dividend 1,300% since Buffett first bought shares in 1988.
  • 2013 corporate awards include: #4 Most Admired Company (Fortune), Top 20 Most Innovative (Fast Company), Top 50 Most Diverse Companies (Diversity Inc), Creative Marketer of the Year (Cannes Lions).
  • Ranked by Interbrand as the World's Most Valuable Brand, with 2012 value of $77.8 billion (46% of its market cap comes only from its brand).
  • KO has 51 years of consecutive annual dividend increases, making this company an excellent long term DRIP candidate.    

Other Pertinent Facts

  • Quality of DRIP program[1]:  Fair (Coca-Cola only gets a Fair ranking due to setup costs and ongoing investment fee, dividend reinvestment fee and sales fee.)
  • Am I an investor?  yes, DRIP investor since 2010
  • One word of caution - if you are investing $25 or less per month, I would not invest in Coca-Cola as its ongoing automatic investment fee of $2 would eat 8% of your investment each and every time.

[1] Fair ranking out of ranking system of Poor, Fair, Good, Excellent.


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