The Coca-Cola Company (KO): This Beverage Company Is A Perfect Example Of A Solid Long-Term Investment

Page 1 of 2

When I talk to my investing friends, most of whom are 30-something professionals, we like to swap our latest picks. Invariably, most of what I hear about is the latest speculative names, such as how an investment in HEMP, INC. (PINK:HEMP) is going to put my grandkids through college . Even the more “conservative” of the bunch will say things like “Google Inc (NASDAQ:GOOG) is going to $1000 this year! I’m putting half of my savings in it!”

While this may very well be the case, Google could just as easily fall back to $600 a share after a mediocre earnings report. Hemp, Inc could make its investors rich, but I give that a 5% chance of happening–and that is being generous. Nobody should be willing to lose 25% or more of their long-term savings, no matter how good the potential rewards may be.

When I tell my friends to put a substantial chunk of their savings in an established giant dividend-payer like The Coca-Cola Company (NYSE:KO), they laugh and tell me about my “boring” portfolio. While I agree that it is fine to speculate a bit with some of your discretionary cash (I certainly do), Coca-Cola is the perfect example of a stock that you should hold for the long term. And 9 times out of 10, these “boring” stocks outperform their exciting counterparts over the long term.

About Coca-Cola

The Coca-Cola Company (NYSE:KO)

As most people already know, The Coca-Cola Company (NYSE:KO) is the world’s largest soft drink company, with sales of almost $50 billion per year. Their products are now sold in more than 200 countries, and they own (or license) over 500 brands. Despite this last fact, I believe there is still room for Coca-Cola to grow, particularly internationally, since over 44% of the company’s revenue still comes from North America. Compare that with the 11.7% of revenues that come from Asia, despite their massive population, and it’s easy to see potential here.

Over the long term, few stocks have had the consistent performance of Coca-Cola. They excel at two areas that long term investors love: dividends and buybacks. As far as buybacks go, over the past two years alone the company has reduced the amount of outstanding shares from 4.67 billion to 4.48 billion, a 4.1% reduction. The Coca-Cola Company (NYSE:KO) also pays a nice dividend of almost 3% currently, and it has raised the amount of the dividend every year in recent history.

With its record of stability and returns, it is no wonder that Coca-Cola trades at a premium to many other companies. Currently trading for 20 times TTM earnings, analysts are projecting an average annual earnings growth rate of 9% going forward. Again, this multiple seems a bit high; however, this kind of rock-solid investment is hard to come by these days, so investors are willing to pay a premium for it.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!