Assessing the Sustainability of Coca-Cola's Upcoming Dividend
Coca-Cola Co (KO, Financial) recently announced a dividend of $0.46 per share, payable on 2023-12-15, with the ex-dividend date set for 2023-11-30. 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 look 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-Pacific.
A Glimpse at Coca-Cola Co's Dividend History
Coca-Cola Co has maintained a consistent dividend payment record since 1963, distributing dividends on a quarterly basis. The company has not only paid dividends but also increased them each year, earning the prestigious title of a dividend king—a testament to its commitment to shareholder returns for over six decades. Below is a chart showing the annual Dividends Per Share to track historical trends.
Breaking Down Coca-Cola Co's Dividend Yield and Growth
Coca-Cola Co currently boasts a 12-month trailing dividend yield of 3.09% and a forward dividend yield of 3.13%, indicating an anticipated increase in dividend payments over the next year. The company's annual dividend growth rate over the past three years has been steady at 3.20%, with a consistent performance over the five-year span. Over the past decade, the annual dividends per share growth rate stands at an impressive 5.40%. As a result, the 5-year yield on cost for Coca-Cola Co stock 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. Coca-Cola Co's dividend payout ratio is currently 0.74, which may suggest that the company's dividend could be at risk if earnings decline. However, the company's profitability rank is a robust 8 out of 10, indicating good profitability prospects and a strong track record of positive net income over the past decade.
Growth Metrics: The Future Outlook
Coca-Cola Co's growth rank of 8 out of 10 suggests that the company has a good growth trajectory compared to its competitors. However, its 3-year revenue and earnings per share (EPS) growth rates are slightly underwhelming when compared to its global peers. Despite this, Coca-Cola Co's 5-year EBITDA growth rate of 30.00% is strong, outperforming 88.24% of global competitors, an encouraging sign for future dividend sustainability.
Next Steps for Investors
Considering Coca-Cola Co's consistent dividend growth, reasonable payout ratio, and solid profitability, the company's dividend payments appear sustainable in the near term. However, investors should keep an eye on growth metrics, as these will be crucial for the long-term sustainability of dividend increases. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
