Time to look back Coke (WKN: 850663) and dividend: Today, or more precisely, we even want to skip half a decade into the past. We come to the heart of the question, how much did the American beverage company pay with the legendary brand at the time. Of course, quality and aristocratic distribution already existed then. Yes, even royal.
But let’s look for clues. Coca-Cola five years ago and today are not that different when it comes to dividends. But there are still differences that a foolish investor should better appreciate. Mainly because they can start right now.
Coca-Cola and the dividend: That was 5 years ago!
In any case, five years ago, Coca-Cola’s board paid investors $ 0.37. Today it is known that it is USD 0.44 per share. Accordingly, there was a rather small adjustment to the amount distributed per share during this period. The dividend has largely stagnated with a slight correction for inflation.
If we calculate the total dividend increase, it is 18.9% for the period. Of course, it is more attractive if dividend shares are paying investors 18.9% more today. Especially if you bought it five years ago on more favorable terms, it shows: there is solid growth potential combined with quality, strong brand and king status. But: Behind the name there is no proper dividend increase. Or not yet.
This year, Coca-Cola increased its dividend per share by 4.8% for the first time, more than in previous years. Is this a deliberate attempt to compensate for inflation? Possible. In any case, if this development were to continue, it could justify a new era and stock valuation. It is relatively expensive now, with a dividend of 2.86% and a price / profit ratio of 26.1.
Operational growth is also starting
However, the recent Coca-Cola dividend increase is not all we can now consider and see. No, there is also operational growth. Management expects earnings per share to grow in a higher single-digit percentage range during the year. This, in turn, may justify stronger distribution growth in the coming year.
Inflation is a market environment that fits these stocks. In this regard, we can at least speculate that management may now deliver more than in the past five years. Or four and a half: finally, this year we saw the first step towards a better and faster-growing future.
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Vincent owns shares in Coca-Cola. Motley Fool recommends the following options: $ 47.50 Long Calls from January 2024 at Coca-Cola.