Is it necessary to present Coca-Cola ? 1.5 billion bottles are sold every day across the planet. The company was founded in 1887 and its inventor, pharmacist John Pemberton, advocated the use of the drink to treat stomach problems. It is true that Coca-Cola can be a great help on some difficult mornings... Paradoxically, Originally, this drink contained alcohol and even cocaine! But Coca-Cola has other qualities from a financial point of view...
When you think about Coca-Cola and investing, Warren Buffett comes immediately to mind. The company is indeed theone of Berkshire Hattaway's most profitable investments, the investment company of the famous American billionaire. The latter is also one of the main shareholders of Coca-Cola. In truth, the title made a huge jump between 1980 and the end of the 90s (+ 7'000%!):
Since 1998, the stock has "calmed down", which has allowed a clear drop in the price/earnings ratio (from 100 in 2001 to less than 20 currently). We are currently in valuations from the point of view of profits identical to those of the 80s., so interesting.
KO offers a dividend yield long term correct, at 3.08%. Dividend growth is not very high, at 8.46%, but The company has been able to increase its distributions for 48 consecutive years, which is quite exceptional. Another notable fact is that the dividend distribution rate is only 34,78%, which gives Coca-Cola a real safety cushion in case of a difficult passage and ensures the growth of distributions for many more years.
KO also has another very appreciable quality: its volatility in CHF is only 9.79%. Indeed, the company is not only in a defensive sector, but it also benefits from a significant share of exports, thus protecting it against currency risks. We had also bought KO last February as part of our diversification strategy against the risk of a fall in the dollar. During this period the greenback lost 3.28% while Coca-Cola remained practically unchanged (in CHF).
Taking these fundamentals into account, our analysis model considers that Coca-Cola is still a buying opportunity today.
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I would like to add that the company buys back shares very regularly. 4 billion in 2010. Added to the 3 billion paid in dividends, Coca is generous with its shareholders.