Growth and Refreshing Dividends
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“Sailin’ ‘round the world in a dirty gondola… Oh, to be back in the land of Coca-Cola!” – Bob Dylan, When I Paint My Masterpiece
Coca-Cola Co. (NYSE: KO), has announced intentions to share their tasty beverages once the U.S. issues a license allowing American companies to conduct business in the country of Myanmar, also known as Burma, or the folks that gave us one of the most delectable appetizers known to all of mankind, crab Rangoon. The announcement shouldn’t garner much in the way of “news,” since everything is all cataclysmic right now, what with the secular bear market well underway in phase two, and no matter how much quantitative easing the Federal Reserve attempts to force into the slow-growing economy (QE3), it’s all going to drop depending on who’s doing the talking. But it’s a nice move into a country with a population of over 60 million, leaving only Cuba and that tourist trap, North Korea, as the only countries on the planet where you can only obtain a Coke and a smile on the black market.
With the market more volatile than an irrational dictator, rather than move all my hard-earned dollars off of the hare and onto the tortoise, I have been listening to more than a few intelligent souls (and some screaming market maniacs). The common thread is, drum-roll… high-yielding dividend stocks. So for all the pundits and pros, pushing their tales of woe and potential doom and gloom, and the economy acting like a colicky baby, the best thing for us amateurs to do is take comfort in the bomb shelter that the robust dividend payers provide.
Along with the inevitable presence of Coke vending machines in Myanmar, or Burma, or whatever you care to call the Southeast Asian country, Coca-Cola CEO Muhtar Kent (no relation to Clark), also stated that the company has plans to infuse neighboring India with $5 billion (with a “b”), of syrupy dollars by the year 2020. Hopefully by that time, the office girls there will enjoy watching the handsome construction workers cool off their sweat-soaked six-packs with a refreshing Diet Coke. I think the steel workers are more along the lines of Dasani drinkers. Either way, once growth-slowing ceases to be an original soundtrack and measures are actually taken instead of spoken, we will all continue to enjoy sweet, carbonated refreshments in some form, I’m sure.
Look for Pepsi (NYSE: PEP), to follow Coke wherever they go, although they may not get the same amount of cooler space. But either way, the thirst-quenching yield each company has to offer allows you to have cash working with reinvested dividends ($2.15 per share annually for Pepsi, $2.04 per share annually for Coke), rather than sitting in a money market account, waiting for “the exact right time” to buy the “exact right stock.”
Whether or not growth is slowing, one thing that is not losing momentum is the dividend growth-rate. Over the past five years Coca-Cola has increased the dividend payout, on average, over 8%, which would double the current amount by the year 2020. Provided certain Mayan calculations are incorrect, that puts the company on track to double revenues, which the CEO has boldly stated they would do by that very year.
When the stock market has you seeing red every time you take a look at your quarterly statement, take some comfort with the solid companies that return profits to loyal shareholders in the way of dividends, constantly striving for success rather than relying on it, and constantly looking to grow in new and emerging markets. So after the two-for-one stock split is in the books, sit back and enjoy a refreshing dividend while we watch the show unfold.
Motley Fool blogger Kyle Metivier owns shares of Coca-Cola. The Motley Fool owns shares of The Coca-Cola Company and PepsiCo. Motley Fool newsletter services recommend PepsiCo and The Coca-Cola Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.