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Coca-Cola : Dividend Reinvestment Fizz?

|Includes:The Coca-Cola Company (KO)

I continue my series today on dividend reinvestment strategies, and how important timing the price can be when making a lump sum purchase on a stock.

Today, I am featuring Coca-Cola(NYSE:KO)

Like the other stocks I have covered before, I will use January,3 as an investment date and use $5000.00 as my lump sum investment.

This strategy is for investors that prefer lump sum investing verses dollar cost averaging .


The above chart shows an average annual return of three-percent  including reinvested dividends. This was based on an investment made in 1997 near the peak of the share price. The annual dividend at that time was 0.56


With 2000 being the investment date, it took about seven years for the stock to really start making an investor serious money. This despite annual dividend increases throughout the decade.


Here is where the stock starts to show some nice gains over a long time period. This is based on a 2003 purchase of $44.00 per share. This is well off the Jan,2000 price of $56.00 per share.


This purchase is based on a 2008 purchase of $61.73 per share. As one can see, even with the dividend increases, it was quite a drop from the initial investment time frame.

I decided to add the following chart below using a April,17,2009 purchase price of  45.02 per share.

A very nice return for a slow moving stock!

In conclusion, while I do like the product and the stock, it is my opinion that if one wants to add this stock to their portfolio, they need to wait for an attractive entry point.

In the past Coke (KO) had a great history of stock splits. This  has not been the case for many years . In my opinion, investors that want this to become a dividend producer should look at entry points in the forty dollar price range.

As disclosure, I do own the stock from time to time . Looking to take advantage of share appreciation only.


Disclosure: No current positions

Stocks: KO