How Coke Stock Rewards Investors
Apr 3rd 2013 2:03PM
Updated Apr 3rd 2013 2:06PM
Some investors are looking for outsize returns in the short term. Others prefer generous dividend checks. True Fools go for a combination of deep value and nigh-on guaranteed long-term performance. If you're in either of the last two categories, Coke just might be your favorite stock.
Coca-Cola runs an amazingly boring, predictable, and profitable business that performs well in good times and bad. The stock has absolutely crushed its peers on the Dow Jones Industrial Average over the last five years, whether or not you reinvested dividends along the way. That being said, one of Coke's main attractions is its dividend, which just about doubled its stock returns across this period:
What if you stretch your investing horizon to decades, rather than a few measly years? The performance delta only grows larger:
And this is where the magic happens. Coke's unimpeachable brand and flawless execution helped the company more than double sales in the last 10 years. Free cash flow jumped 104%, allowing management to increase dividend payments by 154%. Coke stock followed suit with a 165% dividend-adjusted climb.
Coke shares are bound to perform, come hell or high water. Past performance is no guarantee of future returns, of course, but the Atlanta-based beverage giant comes close to that unreachable ideal.
Coca-Cola's wide moat has helped provide its shareholders with superior gains in the past, but the company faces some new threats to its continued market dominance. The Motley Fool recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering buying shares in the company, you'll want to click here now and get started!
The article How Coke Stock Rewards Investors originally appeared on Fool.com.Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. Motley Fool newsletter services have recommended buying shares of Coca-Cola. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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