Although you may frequently patronize Coca-Cola (NYSE: KO), do you also possess a shareholder position? You are aware of at least one of the numerous reasons to own it if this is the case. Should this not be the case, the following are four reasons (in no specific order) why you might want to consider becoming a shareholder as soon as possible.
1. Its dividend lineage is unparalleled.
The 3.2% forward-looking dividend yield on the stock is acceptable but not particularly remarkable. There are undoubtedly stocks with higher yields available.
However, proceed beyond the present yield. Coca-Cola has increased its dividend payment annually for the past 61 years and has distributed dividends like routine for decades. And it appears that these increases will continue indefinitely.
Neither are these pitiful improvements. The dividend is approximately four times what it was fifteen years ago and two-thirds as large as it was in 2015. Inflation has been readily outpaced by growth during that period.
2. The enterprise model is exceptional.
Sustaining the robust dividend is the determining factor, and this company appears to have no reason to be concerned about that. It was constructed and subsequently reconstructed to produce currency in every environment.
Coca-Cola may appear to the average consumer to be a beverage manufacturer. However, it is a licensor of brand names and flavors rather than the bottling company that it initially appears to be. Licensors receive royalties on the products that bottlers produce and subsequently distribute via distribution channels.
The primary function of the organization is to promote and advertise its merchandise. This reduces revenue, but ultimately improves the bottom line due to the significantly higher profit margins in the royalty business compared to bottling.
As we have observed since 2022, it is also more consistent and predictable revenue, as the bottlers bear the majority of the risk and burden of escalating costs.
3. Its branding and logos are potent
And the organization is exceptionally proficient in the field of marketing; in fact, it would be an understatement to refer to Coca-Cola’s advertising endeavors as mere marketing. Additionally, the organization excels at branding, which entails integrating its beverages into a way of life as opposed to merely encouraging the purchase of beverages.
