Is Coca-Cola Stock a Buy After a Dividend Increase?
Investing in stocks is a great way to earn money when those stocks rise, but it can also be a risky game. When looking for potential stocks to invest in, it’s important to stay aware of current news and trends. Recently, Coca-Cola announced a dividend increase, so it’s important to consider whether or not it’s a stock to buy. Here we will explore the value of Coca-Cola stock, and whether or not it’s a buy after the dividend increase.
Investing in the Coca-Cola Company
The Coca-Cola Company (KO) is a global beverage powerhouse that manufactures, markets and sells a world-renowned line of beverages, including soda, juice, tea and energy drinks. Coca-Cola products are sold in countries across the world and the company is the world’s largest producer of soft drinks. As of early 2021, the Coca-Cola Company had a market capitalization of over $238 billion, making it one of the world’s largest companies.
However, Coca-Cola’s stock has taken a volatile ride over the last twelve months with increases and decreases in value as the market fluctuated. The question now is: is Coca-Cola stock a buy after the recent dividend increase?
Why Invest in Coca-Cola Stock?
There are a few reasons to consider investing in Coca-Cola stocks. Here are the top reasons investors look at when considering this stock:
• High dividend: Coca-Cola recently increased its dividend by 8.5%, which is above the 3.2% average dividend yield of the S&P 500.
• Generous buybacks: Coca-Cola has also been able to return value to shareholders through share buybacks.
• Recent acquisitions: Coca-Cola has made several small acquisitions in the last year, including Costa Coffee, a renowned British coffee chain, in an effort to diversify their product offerings and stay ahead of the changing market tastes.
• Resilience: The beverage industry is historically resilient, and Coca-Cola has a long history of success and stability.
The Pros & Cons of Buying Coca-Cola Stock
Like any investment, there are both pros and cons to investing in Coca-Cola. Here’s a breakdown of both:
Pros:
• History of success: Coca-Cola has established itself as one of the top beverage companies with a rich history of sales and growth.
• Dividend: The dividend yield is higher than average and keeps shareholders happy.
• Acquisitions: Coca-Cola is staying ahead of the changing tastes of the market with its acquisitions.
• Buybacks: Share buybacks are a great way to return value to investors.
Cons:
• Price volatility: The stock can be prone to volatile swings as markets change.
• Single product base: Coca-Cola derives most of its value from its signature product, which could be risky if tastes start to change.
• Competition: The beverage industry is competitive and Coca-Cola needs to stay ahead of the competition to preserve its value.
• Limited growth potential: Coca-Cola is a mature company and, while it is still profitable, its potential for growth has been limited.
Overall, it’s hard to make a definitive call as to whether or not Coca-Cola is a buy after the recent dividend increase. Some of the company’s fundamentals are strong, including its history of success and the recent acquisitions. On the other hand, Coca-Cola remains a mature company with limited growth potential and competition in the beverage industry is fierce. Investors will need to weigh the pros and cons and decide for themselves if Coca-Cola is the right stock for their portfolio.
