Coca-Cola has established itself as a reliable choice for investors seeking stable and growth-oriented dividend stocks. The continuous increase in dividends and the company’s solid financial position make it a preferred investment target for many.
Dividend Increase
This year, Coca-Cola was able to increase its dividend by 5.20%. Looking back over the last ten years, the company recorded an average annual dividend increase of 4.67%. Even from a 5-year perspective, the dividend increase at 4.35% remained impressive. These continuous increases are a strong indicator of the reliability and attractiveness of Coca-Cola as a dividend stock.
Financial Stability
Coca-Cola’s payout ratio on free cash flow is 179.4%, indicating that a large portion of its cash flow is used for dividend payments. The company is currently valued at a price-to-earnings (P/E) ratio of 24, which is average for the past five years.
Comparison with PepsiCo
When looking at the competition, it is evident that PepsiCo has increased its dividend at a faster pace over the last ten years than Coca-Cola, with an average annual growth rate of 7.5%. Additionally, PepsiCo is traded at a more favorable P/E ratio of 18, which makes it appear more attractive to some.
Despite these differences, Coca-Cola remains an attractive dividend stock due to its stable finances and continuous dividend growth. Long-term-oriented investors find Coca-Cola to be a secure investment target.