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The Coca-Cola Co (KO)’s Growth Potential & Dividend Analysis

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The Coca-Cola Co (NYSE:KO) is the largest seller of non alcoholic beverages in the world.

The company has had a great run.  It is a Dividend King with an amazing 54 consecutive years of dividend increases.

There’s no doubt Coca-Cola has generated tremendous growth since being founded in 1892.

Some investors think Coca-Cola’s growth days are over

That is not the case.

Coca-Cola

Coca-Cola is benefiting from the growing global beverage industry more than any other company.

The worldwide beverage industry (excluding the US) is expected to increase in value by $300 billion from 2014 to 2020.

Coca-Cola has 30% market share of the global beverage industry.  If the company maintains its global market share up to 2020, it will add $90 billion to its market cap based on the expected increase in global beverage value.

Coca-Cola had a market cap of ~$150 billion at the beginning of 2014. This gives the company an expected compound growth rate of 6.9% (not including dividends and share repurchases) up to 2020…  If the company does not gain any market share.

I believe Coca-Cola will continue to gain market share and reward shareholders with share repurchases and dividends.  This will drive up the company’s growth rate into the double-digits for the next several years.

Among the investors tracked by Insider Monkey, a total of 51 funds own shares of Coca-Cola as of the end of 2015, down by 54 funds a quarter earlier. However, the aggregate value of their positions went up to $20.29 billion from $19.33 billion during the last quarter of 2015 and represented 10.90% of the company. The largest shareholder of Coca-Cola is Warren Buffett’s Berkshire Hathaway, which owns 400.0 million shares worth $17.18 billion, according to its last 13F filing.

Well Positioned for International Growth

Coca-Cola has positioned itself very well to take advantage of growing non-alcoholic beverages worldwide.

The image below shows the company’s strong competitive position around the world.
Coca-Cola Worldwide

As per capita income increases in Eurasia, Africa, and the rest of the developing world, Coca-Cola stands to gain.

Beverage Industry Growth & Rising Per Capita Income

Rising personal income throughout the world gives consumers more disposable income to purchase non-essential items like Coca-Cola.

Coca-Cola is enjoyed on a per capita basis much more in some countries than in others.  This gives Coca-Cola the opportunity to focus on countries with low levels of per capita consumption as the market is less saturated.

About 50% of teens and young adults have not enjoyed a Coca-Cola in the last 30 days.  Coca-Cola still has a long growth runway ahead.

Follow Coca Cola Co (NYSE:KO)
Trade (NYSE:KO) Now!
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