Last week, Coca-Cola announced that the quarterly dividend was going to increase from $0.305 per share to $0.33 per share. It is that announcement every February, dating back to 1963, that explains why I find this company so appealing. Truth to be told, as nice as the income increases are, it is really the consistent earnings power represented by that dividend increases that catches my attention.
I want to be sure I separate the roots from the leaves: The real reason that Coca-Cola is such an attractive investment is that there are 500 nonalcoholic beverages across 210 countries earning $0.275 profits on every $1 paid by the customer. You buy a case of Coca-Cola for $7, the company goes and makes $1.92 in profit that can be paid out to shareholders, used to repurchase stock, or make new bottling/drink acquisitions. It’s a little bit more complicated than that—I used the mean product offering profit margins—so that Coca-Cola itself would be more profitable than, say, something like Diet Fanta (does that even exist?) but the attractiveness of the business model is clear.