Dividend Increase – Coca Cola (KO)
On February 15th, Coca Cola announced a dividend increase of 5.4%. This will increase their dividend per quarter from $0.37 to $0.39. It is payable on April 2nd for shareholders of record on March 15th.
This will mark the 55th consecutive annual dividend increase. With a payout ratio around 74.6% it is kind of on the high side but I am still ok with it at this point.
Coca Cola is currently offering a dividend yield of 3.60%.
I am a bit late on this increase and I apologize for that but I wanted to post about it anyways.
Coca Cola reported a strong 6% organic revenue growth. The company seems to be making some of the right moves to continue building returns for their shareholders. I would have liked to see stronger volume growth but I am content with the growth that they reported.
The company has raised forward guidance. It raises expectations for the year ahead but it also tends to give investors confidence in the company which can often times cause the share price to rise with those expectations.
As I mentioned above their payout ratio is a bit high and I wouldn’t want it to go much higher. The company maintained a payout ratio around 50% for the early part of the century but it has been steadily climbing for the past 5 years. Currently I feel as though the dividend is stable and safe but I do think that this is an issue that management needs to address sooner rather than later.
A small dividend increase like this will not affect my income a whole lot since I don’t have a large position in the company. With this increase it will add an additional $0.28 to my quarterly dividend and will add $1.15 to my projected annual dividend income. This is not taking into account the compounding factor.
At the current time, Coca Cola is priced slightly below my cost basis. Despite being below my cost basis I would like to see the price get down closer to $40 per share before I look at adding to this position.
Regardless of how large or small, I love all dividend increases. That is how we end up with More Dividends 😉
Do you currently hold any stock in Coca Cola? What do you think of this dividend increase? Just let me know in the comments.
As always I look forward to reading all of your comments and questions, until then….. happy investing!
-Jason from MoreDividends.com
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Nice summary Jason. I own Coke too and have for quite a few years. You hit the issue right on the head. Dividend increases have slowed and have come mostly at the expense of a rising payout ratio. They have had trouble adapting to changing consumer preferences, but I think they will adapt over time. I will hold for the long term here with KO and collect my dividends. Tom
Tom from Dividends Diversify recently posted…The World Sure has Changed – Or has It?
My thoughts exactly Tom. These very large companies tend to be very slow to transition but they normally have the capital to fund the transition. I plan to long for the long term as well. Thanks for stopping by!
Nice MD, sounds like you’ll be getting more dividends from KO for quite some time. I don’t hold KO but do think it’s a decent long term holding although they need to adapt a bit more to changing consumer tastes. People are certainly more health conscious now and often soda doesn’t play into that.
timeinthemarket recently posted…Time in the market dividend review – February 2018 – bond yields aren’t terrible now?
I think it is a good business with some head winds. It will take them some time to transition but I think they will be fine over the long term. Thanks for stopping by.