- Coca-Cola's stock performs like an equity bond, i.e., a stagnant market price to an attractive inverse dividend yield.
- The company unapologetically pays out close to 150% of adjusted earnings in shareholder dividends to counter slow growth and a market shy stock price.
- Further flattening the fizz, the stock is trading at lofty valuation levels.
- But its ubiquitous global brand and growing dividend keep the stock as one of the top defensive core holdings against this historic bull market.
For better or worse, the company and its stock carry an asymmetric growth opportunity countered by limited downside risk. The jury is still out on new chief executive James Quincey but how far can any CEO move the needle at 1 Coca-Cola Plaza?
Thus, Main Street Value Investor’s margin of safety rating for Coke is bearishon new investment.
In our view, KO continues as a multi-year play for current shareholders mostly because of its predictable dividend. However, the price is perhaps too lofty to buy or add at this point and likewise too safe to sell in this extra innings bear market.
Here’s our updated research on one of the top five most recognizable global brands.