Coca-Cola Raises Dividend Again

| About: The Coca-Cola (KO)


Company announced dividend raise to $1.40 per year.

Increase matches comparable currency EPS growth forecast.

New annual yield about 50 basis points above 30-Year US Treasury.

Earlier this week, I previewed the upcoming potential dividend raise from the Coca-Cola Company (NYSE:KO). Given the company's adjusted EPS forecast and a declining share count, I figured we would see an increase to the quarterly dividend somewhere in the mid single digits. On Thursday morning, Coca-Cola's board of directors did just that, announcing the company's 54th consecutive annual dividend increase.

The company's board announced a two cent increase to the quarterly dividend, going from 33 cents a share to 35 cents. This is a raise of slightly more than 6%, which basically matches the company's comparable currency EPS growth forecast for this year. The raised payout will first be available to shareholders as of March 15th. In the chart below, you can see the impressive rise in the dividend since 2003.

From the comments I received in my past few articles on Coca-Cola, most investors should be happy with this dividend raise. While there were a few people looking for at least a 2.5 cent raise, the company might have just decided to stick with a whole cent payout. Additionally, with currency headwinds and refranchising efforts taking down overall earnings, a slightly conservative increase was most likely justified.

Based on Wednesday's closing price, Coca-Cola shares now yield about 3.21% on an annual basis. Considering that a 30-Year US Treasury bond currently goes for less than 2.70%, income investors should continue to favor Coca-Cola. In the end, the company delivered another dividend raise, and the 6% increase in the quarterly payout should make investors very happy.

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