The 10 Most Recession-Proof Dividend Aristocrats

#7 – Coca-Cola

• 2007 through 2009 total return of 28.1% (versus -15.9% for the S&P 500)
• 2007 through 2009 maximum drawdown of 40.6% (versus 55.2% for the S&P 500)

The Coca-Cola brand is well-known around the world. In total, the Coca-Cola Co (NYSE:KO) has 20 brands that generate over $1 billion a year in sales. Many of these are non-carbonated, including Dasani, Simply juice, Fuze Tea, Minute Maid, Vitamin Water, and Gold Peak tea.

Coca-Cola is nothing if not consistent. The company delivered earnings-per-share growth of 7.2% a year over the last decade. Dividends grew at 9.0% a year over the same time period. Coca-Cola’s management expects long-term growth of between 7% and 9% a year. On top of this growth, Coca-Cola stock has a 3.5% dividend yield. This gives investors expected total returns of between 10% and 12% a year for Coca-Cola.

The Coca-Cola Co (NYSE:KO) is a Dividend King. This means the company has paid dividends for 50 or more consecutive years. Being a Dividend King means a company qualifies to be a Dividend Aristocrat – twice. Click here to see all 16 Dividend Kings analyzed.

As one would expect from a company that sells low priced non-alcoholic beverages, Coca-Cola remained highly profitable throughout the Great Recession of 2007 to 2009. The company’s earnings-per-share over this time period are shown below:

• 2007 earnings-per-share of $1.29
• 2008 earnings-per-share of $1.51
• 2009 earnings-per-share of $1.47

Earnings-per-share did decline 2.6% from 2008 to 2009; this is a very smalldecrease compared to large earnings declines suffered by the overall market. Coca-Cola has proven over the last 50 years that it will pay rising dividends year-in-and-year-out, regardless of the overall economy.

The Coca-Cola Co (NYSE:KO) is currently trading for a price-to-earnings ratio of 17.3 (using adjusted earnings). The company appears somewhat undervalued given its above average expected total returns and sleep-easy-at-night level of safety. The stock helped Warren Buffett outperformed the market since early 90s.