Given the century-long history of the shares of the Coca-Cola company, they can safely be called a “gift” to long-term investor. Investment of $100 made at the time of the IPO, today would turn into a million dollars and even more if you follow the reinvestment of dividends.
Price for the shares of Coca-Cola (KO) today is 13.6% lower than at the beginning of 2020, and the profits and gains of the second quarter, the company fell by a third due to declining sales in restaurants and entertainment in the context of the pandemic. At the same time, Coca-Cola shares are considered “blue chips”, and the company has longstanding credibility and history with a continuous series of annual increases in dividends in length 58.
International economists warn that the negative effects of the pandemic retailers will survive for a long time. In turn, the management of Coca-Cola in July, said it sees improvement in demand as the weakening of quarantine measures around the world.
Anyway, most investors recognize the current continuing uncertainty in the short term.However, if we consider Coca-Cola shares as an asset for long-term investments, it is worth considering that the company is exceptionally durable and stable position with a wide coverage of the market.
The history of Coca-Cola, since the release of the public market 5 Sep 1919 proves that its shares are a “gift” for long-term investor. At the time of the IPO, one share of Coca-Cola was worth $40, since after 13 fragmentations, one share turned into 9216, and the investment of $100 today, a century later, would become at least $1.1 million If along the way, you reinvested your dividends, the yield increased again twice.
Shares of Coca-Cola is a very profitable investment if you intend to earn money by receiving dividends with a yield in the range of 1,2%-3,5% (range over the last 30 years of the history of Coca-Cola). Only 2019 global drinks manufacturer has paid dividends in the amount of $6.8 billion, boosted free cash flow of $9.4 billion. Interestingly, the figure of $6.8 billion represents the sum of the market capitalization of Coca-Cola in the summer of 1985.
The dividend yield of 3% may not seem that big, but together with the growth stocks, the asset promises the big profit in the long run.
In addition, do not forget about the possibility of reinvestment of dividends. The inclusion of the plan dividend reinvestment (DRIP) for shares of Coca-Cola since the mid-1970s, years before the current time would increase investment returns by half.
In such circumstances, the income of $1.1 million from one share in 1919 would have amounted to $2.47 billion Thus, Coca-Cola is an example of a century history of successful business model with a dividend policy favourable to shareholders.
