As an investor, there’s something special about receiving a quarterly dividend payment – it’s basically a reward for your ownership in a company.
And when that investment also allows me to enjoy a Coke, it explains why The Coca-Cola Company (NYSE: KO) is one of the few individual stocks I hold.
Coca-Cola isn’t just any company; it’s a dividend powerhouse. Having increased its payouts for 62 consecutive years, it now offers a robust yield of 3.10%.
Here, I’ll share my predictions for where Coca-Cola’s dividend might be in a year, alongside some historical data to show how its investors have fared over time.
Coca-Cola dividend history
Now, if you’re thinking of buying Coca-Cola today for the next dividend, you’ll have to wait a bit. Why? It recently went ex-dividend in mid-March.
When a stock goes “ex-dividend,” it means that anyone who buys the stock from that day onwards will not be eligible for the next dividend payment.
For example, Coca-Cola most recently went ex-dividend on March 14, 2024, with a dividend of $0.485 USD per share, which was payable on April 1, 2024.
This dividend payment of $0.485 is what you receive quarterly, and it’s expected that the next three payments for 2024 will be at the same rate.
Looking back at Coca-Cola’s dividend history, the company paid $0.46 per share quarterly in 2023, $0.44 in 2022, and $0.42 in 2021. Typically, Coca-Cola has increased its dividend by about $0.02 per share each year.
Given this pattern, it seems reasonable to predict that next year’s dividend could be around $0.50 per share, assuming the company continues its trend of annual increases and everything goes as planned.
A historical investment in Coca-Cola
Imagine you travelled back to 1986 and invested $10,000 in Coca-Cola. Over the years, thanks to the company’s strong performance and regular stock splits, this initial investment would have grown significantly.
Specifically, the value of your shares would have compounded at an annualized rate of 9.73%, turning your $10,000 into $350,883 based purely on price returns.
But let’s consider a scenario wherein you didn’t just sit on the dividends received; instead, you reinvested them back into buying more Coca-Cola shares whenever they were distributed.
With this strategy, your investment would have benefited not only from the increase in stock price but also from the power of compounding dividends.
As a result, your $10,000 would have snowballed into an impressive $871,063, achieving an even higher annualized return of 12.4%.
This illustrates the significant impact that reinvesting dividends can have on the overall growth of an investment, especially with a blue-chip stock like Coca-Cola that has a long history of dividend growth.
But, as solid as it is, Coca-Cola is still a single stock. If you’re a long-term investor, consider diversifying with some other picks (and the Fool has some great suggestions down below!).
