Strong year-over-year cash flow allows Coca-Cola to return a significant amount of capital back to shareholders through dividends 3.
Coca-Cola Stock Buybacks (Quarterly) (KO)
I believe the stock has traded down due to being a transition year as Coca-Cola continues to make progress on refranchising its bottling system. Over the short-term, this has reduced revenue and income and will continue to do so.
However, this is a good long-term move. The bottling business is capital-intensive and is low-margin revenue.
Refranchising will increase productivity and improve operating margins. I'm going to trust Coca-Cola since they have rarely steered their shareholders in the wrong direction.
Coca-Cola And Share Repurchases: 'Value Neutral'? - edegawiwajy.web.fc2.com
I still believe this stock is a good bet for the following reasons:. Coca-Cola is one of the most recognizable consumer brands in the world. According to Forbes , Coca-Cola ranked as the 4th most valuable brand, only trailing Apple, Google, and Microsoft. That's a pretty impressive club to be a part of. Coca-Cola has been around for a long time. This is a company that has staying power and not much has changed over the last century. I'm a big believer in previous performance being the best indication for future performance.
Even though was considered a down year, their year-over-year growth over the last 30 years has still been impressive. As I mentioned before, Coca-Cola is refranchising their bottling system, which is driving sales down.
TTM data by YCharts. Many companies report good 'earnings' but to be a truly great business, earnings translate into cash flow and Coca-Cola is one of the best in the business at doing that. Their strong, reliable annual free cash flow is what supports my following 3 points.
My favorite thing about Coca-Cola is its solid quarterly dividend, which started way back in This gives Coca-Cola the 5th highest yield out of the 30 stocks on the Dow Jones Industrial Average.
Coca-Cola has increased its dividend for the last 55 years in a row, a pretty incredible feat. This means they have been an aristocrat two times over. Few other stocks are a part of that club. KO Dividend data by YCharts. As with many other blue-chips, Coca-Cola is an active purchaser of their own stock. I'm generally a fan of stock repurchases for a variety or reasons. First, it's a form of returning capital back to shareholders, just like a dividend. Second, it increases earnings per share, even if earnings have remained flat.
Lastly, companies normally wouldn't purchase their own stock unless they believe it's attractively valued, so I view this as a bullish sentiment. There's only been a handful of times over the last years when valuations have been higher i. Coca-Cola has a beta of 0.
Google Finance , which means it will be less volatile than the overall market, which can stabilize your portfolio during a future downturn. One of the reasons Coca-Cola has such low volatility is how strong their brand is, which makes the company almost recession proof.
The Coca-Cola Company (KO) Dividends & Buybacks | Value Investing in Seconds - edegawiwajy.web.fc2.com
No matter how the economy is doing, consumers will generally keep buying Coca-Cola products. Coca-Cola isn't cheap and it never will be. The best blue-chips rarely ever go on sale and Coca-Cola is no exception. KO Normalized PE Ratio TTM data by YCharts. The multi-year market rally is still going strong, but Coca-Cola has not benefited over the last year.
The likely culprit is a little bit of uncertainty as Coca-Cola transitions away from their bottling business. While this will depress sales for the next couple of years, I'm confident in Coca-Cola's leadership based on their track-record. Now is as good of a time as ever to pick up one of the most reliable stocks on the market. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha.
I have no business relationship with any company whose stock is mentioned in this article. REITs Dividend Ideas Dividend Strategy Dividend News Dividend Quick Picks Editor's Picks.
I still believe this stock is a good bet for the following reasons: The Coca-Cola Brand Coca-Cola is one of the most recognizable consumer brands in the world.
Previous Performance Coca-Cola has been around for a long time. Want to share your opinion on this article?
Investors Info: Authorized Share History: The Coca-Cola Company
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