Always The Coca-Cola Co (KO): 3.4% Yield & 53 Years of Dividend Increases

As you can see, Coca-Cola is trading for its highest dividend yields of the last 2 decades, excluding the Great Recession period of 2007 to 2009.

Simply put, now is the best time outside of the Great Recession for dividend investors to buy into Coca-Cola.

With a 3%+ dividend yield and expected earnings-per-share growth of 7% to 9% a year, investors in Coca-Cola should expect total returns of between 10% and 12% a year going forward.

Valuation & Final Thoughts

Coca-Cola currently has a price-to-earnings ratio of 17.3 (using adjusted earnings, not GAAP earnings). The company appears to be trading at the low end of fair value at this time.

The Coca-Cola Co (NYSE:KO) compares favorably to the S&P 500 index:

• KO P/E ratio of 17.3 versus 19.5 for the S&P 500
• KO dividend yield of 3.4% versus 2.2% for the S&P 500
• KO expected total return of 10% to 12% versus ~9% for S&P 500

Note: The S&P 500’s expected total return is based on its long-term historical average. Returns could well be lower over the next several years.

In addition, Coca-Cola is of a significantly higher quality than the average S&P 500 stock. Coca-Cola possesses a strong and durable brand and scale based competitive advantage in a slow changing industry. This virtually ensures Coca-Cola will continue growing for decades to come.

Coca-Cola’s combination of safety, stability, high dividend yield, and reasonable valuation make it a favorite of The 8 Rules of Dividend Investing.

Disclosure: None