Historically, Coca-Cola has been a dividend stock with a good reason. Dividend King companies pay and raise their dividends consecutively for at least 50 years. Coke is a Dividend King with 60 consecutive dividend increases. This makes it one of the most reliable systems available.
The company has taken several initiatives to become leaner and run more efficiently, such as leaning into digital and reducing its brand count to 200 from 400. They have led to more robust consumer relationships and an efficient organization.
Reasons to avoid
A cash cow is also a company that generates tons of revenue and is always flush with cash.
Most companies maintain a payout ratio of about 75%, meaning a quarter of their cash is invested in the business. After the pandemic, the dividend increased by more than 100% because the company was committed to raising and paying its dividends regularly.
The dividend yield is currently 2.6%, which is lower than usual. There is usually a hovering rate of 3%. A stock’s dividend yield decreases when its price increases, and its dividend yield increases when its price decreases.
Coca-Cola stock has been a great performer in the current market due to people’s preference for safe dividend stocks. It has gained 10% this year, and the S&P 500 has lost 10%.
Investors have gained on the stock in the short run because the yield is currently pressured. You can hold Coca-Cola forever because it is a dependable and stable dividend stock.
Technical analysis
Now that things are looking up again, revenue for the second quarter of 2022 is $11.3 billion, an increase of 12% yearly. Coca-Cola has been impacted by inflation and macroeconomic headwinds that negatively affected profitability, and its earnings per share (EPS) declined 28% to $0.44, while comparable earnings rose 4% to $0.70.
