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I discussed my sale of shares in Intel Corporation (NASDAQ:INTC) late last week, closing out my position with the company. I then revealed that I used most of the proceeds from that sale to initiate a position in Omega Healthcare Investors Inc. (NYSE:OHI). However, I also let you readers know I took the rest of the cash from the sale of Intel and combined it with fresh capital from my day job to make one more purchase. And today I'll be discussing that transaction.

Overall, I'm really excited about these recent moves. I feel like I let go of a company that has failed to live up to some promises and has not been very clear with its dividend policy, while adding a couple of companies in its wake that have been wonderful in rewarding shareholders with growing income. That's a win-win!

I purchased 30 shares of The Coca-Cola Company (NYSE:KO) on 1/24/13 for $38.98 per share.

The Coca-Cola Company needs no introduction. A global juggernaut in beverages, the company owns or licenses more than 500 nonalcoholic beverage brands. Their products are available in over 200 countries, and they own 16 billion-dollar brands. They are the world's largest beverage company. They're widely diversified across the globe, with Latin America representing 29% of volume, North America at 21%, Pacific accounts for 18% as does Eurasia & Africa, with Europe coming in last at 14%. The company sold 27.7 billion unit cases worldwide in 2012, up from 26.7 billion in 2011.

I'll be honest and say I've been lukewarm on Coca-Cola over the last year or so. I haven't been highly interested in adding shares to this company because of its perceived lack of value, while instead I focused on other companies that offered better value. However, it's not always just about value. One also needs to keep a keen eye on quality, and I can think of no company that exudes quality more than Coca-Cola. My memory was refreshed on how important quality is when taking a hard look at Intel last week before I ultimately decided to sell it. A high quality company can face a few rough years and keep on ticking - growing the dividend, clearly communicating with shareholders on growth plans, and continuing to execute key strategies.

I've asked myself in the past-- if I could own only one company in my portfolio, what would it be? That answer turned out to be Coca-Cola, so it comes as a bit of a surprise that it's a rather small position for me after four years of active investing. So I decided to partially rectify that situation after shares took a slight dip last week and add to my position with the company.

What I really love about Coca-Cola is how seriously they take their shareholders, and the relationships therein. For example, on their Investor Relations page they have a tab titled "Shareowner Information" where the company states: "Our mission is to create value for you, our shareowners, over the long term. We are pleased to have you as a shareowner and grateful for the confidence you have demonstrated by entrusting us with your investment." And they're not just talking the talk: the company returned $9.1 billion to shareholders through share buybacks and dividends in 2012 alone. I love it when a company takes shareholders seriously, and communicates that appropriately. That gives me a lot of confidence investing in the business for the long haul.

Coca-Cola has experienced rather robust growth over the last decade. Revenue has a compound annual growth rate of 9.6%, up from $21 billion in 2003 to $48 billion in 2012. And earnings per share has a CAGR of 8.9% over this same time period, up from $0.89 to $1.97. Dividends have compounded at a rate of 9.8% over this same time frame. Seeing a trend? Coca-cola is about as consistent as it gets. ROE has been right around 30% over this time period as well, which is rather strong. Growth looks set to continue; S&P Capital IQ predicts an 8% CAGR in EPS over the next 3 years.

Coca-Cola's financial position remains very strong. The debt/equity ratio is 0.4, with over $16 billion cash on the balance sheet. The interest coverage ratio, at 30, is solid. There's really nothing to not like here. And what about the dividend? Coca-Cola has been paying a quarterly dividend since 1920, and has managed to increase the dividend for the last 51 years. As stated above, the 10-year DGR stands at 9.8%. Overall, these are extremely impressive statistics. There are only a handful of companies with the kind of rich dividend history that Coca-Cola possesses.

One major aspect of Coca-Cola's strategy right now is what they call the 2020 Vision. This is a specific and clear strategy for the 2010-2020 decade, whereby Coca-Cola plans to more than double its global servings per day over this time period to 3 billion. The vision focuses on six "P's" - Profit, People, Portfolio, Partners, Planet and Productivity. Basically, Coca-Cola wants to not just be massively profitable, but be a great place to work and be environmentally responsible as well. I say kudos to that. Furthermore, setting specific and aggressive goals over a 10-year time frame is wonderful. It keeps the company and its employees focused on a mission and provides a clear target for which to measure success against.

I've been discussing the importance of competitive advantages a lot here lately, and how these advantages build an economic moat for a company. And when you're looking for companies that possess what's referred to as a "wide economic moat" in the financial industry it's widely agreed that Coca-Cola is a model example of this. Huge brand name recognition, economies of scale, global distribution and a product that people are usually willing to pay a premium for because of quality.

There are some risks involved with investing in Coca-Cola. The company does face competition, chiefly from PepsiCo, Inc. (NYSE:PEP). In addition, there is a trend in developed nations like the U.S. to avoid many of the sugary beverages that Coca-Cola markets and sells because of added calories. However, I feel that Coca-Cola's market diversification across the globe, in addition to the product diversification within the company, helps reduce some of the potential headwinds the company faces in regards to backlash against some of their products. For instance, the company sells bottled water and a plethora of natural juices. In addition, the company is well positioned to make acquisitions that better match changing consumer tastes and trends over time.

After fully quantitatively and qualitatively analyzing Coca-Cola, I feel totally comfortable increasing my position here. While shares in KO aren't particularly cheap right now with a P/E ratio of 20, it's a high quality company trading for a fair price. I valued shares using a Dividend Discount Model analysis with a 10% discount rate and a 7% long-term growth rate (well below Coca-Cola's historical norm) I get a fair value on shares of $40. The margin of safety is probably minimal with shares in Coca-Cola at today's prices, but with equity this high quality the margin of safety may not need to be as large as, say, a technology or pharmaceutical business that could face earnings drops in a cyclical valley. Furthermore, shares in KO don't often yield 3% and with shares yielding 2.89% today we're pretty close that that. Moreover, Coca-Cola is due for a dividend increase in February which will likely push it over that 3% yield mark, which is generally a good time to acquire shares in this beverage giant.

This purchase adds $33.60 to my annual dividend total based on the current quarterly dividend payout of $0.28. With the addition of these shares, I now own 110 shares of The Coca-Cola Company. My portfolio currently holds 43 positions. This is unchanged, as the purchase of KO shares was an addition to an existing investment. I'm going to include current analyst valuation opinions below, as I use these to concentrate my reasonable valuation estimate.

*Morningstar rates KO as a 4/5 star value, with a fair value estimate of $45.00.
*S&P Capital IQ rates KO as a 5/5 star Strong Buy with a fair value calculation of $34.20.

I'll update my Freedom Fund in early February to reflect my recent addition.

Disclosure: Long OHI, KO, PEP

Source: Another Dividend Buy This Month: Coca-Cola Company