As many of you are aware, I have written a lot about dividend and growth stock investing for retirement. Please review many of my articles (read this author spotlight review) to get a better understanding of where I am coming from, my investment style and strategies, as well as some of my opinions.
One of the stocks not in our core portfolio that I feel should be is Coca-Cola (KO). I am not really sure why it's not in the retirement portfolio that we have been following here, nor why it is not in my own portfolio. I use their products, and they have the single most identifiable brand name and image on the planet.
What I do know is that since last week's earnings report by KO, I will be adding it to my core portfolio and offer it as a great addition to any portfolio.
The Basic Fundamentals
Coca Cola (KO): Price: $68.44/share, Dividend Yield: 2.85%, ESS Rating: Bullish
KO had a knockout earnings report which showed significant gains in earnings and revenues, gross profits, reduced costs, increased operating income, reduced interest expense, increase interest income, 50% increase in cash on hand, and an increased dividend for 2011 of nearly 7%. (Read the entire report here)
Suffice it to say, it doesn't get much better than that.
A peek into their global presence is all you need to know that the future of KO is as solid as the brand itself.
Also noted in the press release;
"Launching new "Productivity and Reinvestment" program with incremental annualized savings of $550 to $650 million by the end of 2015 as a natural outgrowth of the Company's 2020 Vision to design and implement the most effective and efficient business system."
Why Buy KO Now
I guess the most compelling reason for me to buy it now for my personal account is the fact that I do not already have it. I have missed out on a consistent dividend paying growth stock that should have always been in my portfolio.
Now is as good a time as any, since I can capture the next Dividend, and also start owning a stock that since 2006 has raised its dividend rate by nearly 10% a year, all throughout the downturn and back. I can easily anticipate an increased dividend coming up before their next announcement, and it could be over 10% in my opinion, bring the dividend to over $2.00/share for 2012.
KO's payout ratio is only 51% so it can well afford to continue its wonderful run of dividend increases.
As far as capital appreciation is concerned, while i wish i owned the stock years ago, I feel that with an improving economy and the growth of emerging markets around the globe, KO can appreciate steadily and if they implement what they have stated within their own forecasts as noted, then we could see all time highs ($85.50/share in 1998) over the course of 18-24 months quite easily in my opinion. All the while, cashing dividend checks which will most likely increase each year.
It's never too late to own the greatest brand on the face of the Earth. Now is as good a time as any and I am not going to wait any longer.
My portfolio could use a refreshing new face. Perhaps yours can as well.