Coca-Cola Co (KO) Dividends

Coca-Cola Co (KO) Dividends

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Coca Cola Dividend Payout Ratio Based On Cash Flow

The bottling transition resulted in profit and cash flow reductions. That created a very high dividend payout ratio for a couple of years.

Chart 3: KO Dividends and Cash Flow Trend

Coke’s free cash flows vs dividends paid
Coke’s free cash flows vs dividends paid

Most noteworthy, dividends paid exceeded free cash flow. I believe this is the primary reason Coke’s dividend growth declined.

So, it was a good sign to see Coke’s dividend payout ratio decreasing over the past several years.


Are Coca-Cola Shares A Good Investment?

Investments, including dividend stocks, should always be evaluated against one’s investment objectives. If your objectives include:

Then, yes. Coca-Cola shares are a good investment.

Next up, let’s address a big issue that’s been on my mind as a dividend investor

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Coca-Cola has been quenching people’s thirst for nearly a century. The company manufactures and sells its drinks worldwide with an emphasis on away-from-home locations like restaurants, movie theaters, and theme parks. The strategy had an adverse impact during the coronavirus pandemic but is now a tailwind as economies have reopened

Coca-Cola pays a dividend of $0.42 per share every quarter, which is good enough for a dividend yield of 3.07%. In recent years, the company’s dividend payout ratio, which is the part of earnings paid out as dividends, has increased to over 100%. Notably, a dividend payout ratio over 100% is unsustainable in the long run because eventually, the business will run out of cash. 

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