An Analysis of Coca-Cola Co's Dividend History, Yield, Growth, and Future Prospects
Coca-Cola Co(KO, Financial) recently announced a dividend of $0.46 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Coca-Cola Co's dividend performance and assess its sustainability.
What Does Coca-Cola Co Do?
Founded in 1886, Atlanta-headquartered Coca-Cola is the world's largest nonalcoholic beverage company, with a strong portfolio of 200 brands covering key categories including carbonated soft drinks, water, sports, energy, juice, and coffee. Together with bottlers and distribution partners, the company sells finished beverage products bearing Coca-Cola and licensed brands through retailers and food-service locations in more than 200 countries and regions globally. Coca-Cola generates around two thirds of its total revenues overseas, with a significant portion from emerging economies in Latin America and Asia.
A Glimpse at Coca-Cola Co's Dividend History
Coca-Cola Co has maintained a consistent dividend payment record since 1963. Dividends are currently distributed on a quarterly basis. Coca-Cola Co has increased its dividend each year since 1963. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 60 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Coca-Cola Co's Dividend Yield and Growth
As of today, Coca-Cola Co currently has a 12-month trailing dividend yield of 3.09% and a 12-month forward dividend yield of 3.16%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Coca-Cola Co's annual dividend growth rate was 3.20%. Extended to a five-year horizon, this rate stayed the same. And over the past decade, Coca-Cola Co's annual dividends per share growth rate stands at 5.40%.
Based on Coca-Cola Co's dividend yield and five-year growth rate, the 5-year yield on cost of Coca-Cola Co stock as of today is approximately 3.62%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Coca-Cola Co's dividend payout ratio is 0.75. This may suggest that the company's dividend may not be sustainable.
Coca-Cola Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Coca-Cola Co's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Coca-Cola Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Coca-Cola Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Coca-Cola Co's revenue has increased by approximately 4.60% per year on average, a rate that underperforms than approximately 54.17% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Coca-Cola Co's earnings increased by approximately 1.90% per year on average, a rate that underperforms than approximately 60.23% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 37.60%, which underperforms than approximately 7.69% of global competitors.
Next Steps
In conclusion, while Coca-Cola Co's dividend payments and growth rate are impressive, the sustainability of these dividends is a concern due to the high payout ratio. However, the company's strong profitability and growth metrics suggest a positive outlook. Investors should consider these factors while making informed decisions about investing in Coca-Cola Co.
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