First, let’s start with the refreshing news:
On February 17, 2011, Coca-Cola Board of Directors approved and announced the company’s 49th consecutive annual dividend increase, raising the quarterly dividend 7% from $0.44 to $0.47 per common share. From the press release, the increase was said to reflect the Board’s “confidence in the company’s long-term cash flow. The company returned $7.2 billion to shareowners in 2010, through $4.1 billion in dividends and $3.1 billion in share repurchases.”
Second, let’s discuss why I think Coke is really “it”.
As a consumer there is lots to like:
With a portfolio of more than 3,000 beverages, from sparkling beverages to still beverages such as fruit juices and fruit drinks, water, sports and energy drinks, teas and coffees, and milk-and soy-based beverages, Coke’s products span the globe. These products are everywhere. These products are inexpensive and I think they taste pretty darn good, especially with some rum in the summer!
As an investor, geez, what’s not to love?
Right from their mission statement and corporate roadmap, it’s all there in plain language. “Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.
• To refresh the world…
• To inspire moments of optimism and happiness…
• To create value and make a difference.”
Focused, captivating and clear. You know where they’re going.
Secondly, their financials tell a story of on-going success. Here are some highlights:
• 2010 annual revenues = ~ $35 billion.
• 2009 annual revenues = ~ $31 billion
• 2008 annual revenues = ~ $32 billion
• 2007 annual revenues = ~ $29 billion
Cash flow last year was over $8 billion. In 2008 it was $7.5 billion and the year before it was $7.1 billion. It’s growing to say the least.
Coca-Cola has a moderate payout ratio. It’s less than 60% so the dividend is very safe and has room to grow.
Coke has a five-year average dividend growth rate of over 9%.
Total return (including dividends) over the last five years is over 70%.
Bottom line, Coca-Cola is an outstanding stock to own.
As Dividend Monk nicely put it, this “company has had solid revenue, earnings, and cash flow growth. The stock offers an above average dividend yield, and has been diligently increasing dividends over the past
48 49 years. This is the type of company that just works, period.” Like Derek Foster recently told me, nobody is going to replace this company anytime soon. Based on another year of refreshing dividend news, I couldn’t agree more Derek.
What do you think?
For consumers and investors, will Coca-Cola always be it?
I look forward to your comments!
My Own Advisor