Coca-Cola (KO -0.15%) is a classic Dividend King stock. It has raised its dividend for the past 62 years consecutively, one of the longest streaks on the market. It's an established, blue chip industry leader, and in the early stages of the pandemic it demonstrated that it's committed to the dividend even under the most severe economic pressure.
Management approved the 62nd consecutive annual dividend hike in February. How much will it pay out to shareholders in 2024?
High yield, high payout ratio, high value
Coca-Cola is the largest all-beverage company in the world, with $46 billion in trailing-12-month sales. Although it's feeling the impact of inflation, it has maintained sales growth and robust profits through its dominant position and unparalleled distribution network. That allows it to maintain its dividend.
The company raised its dividend 5.4% in February to $0.485 per share quarterly, or $1.94 annually. At the current stock price, the dividend yields 3.1%, or about 2.5 times the average S&P 500 yield.
Coca-Cola isn't just a top dividend stock because of its high yield; the dividend is reliable and growing. Coke paid $8 billion in dividends in 2023, with a payout ratio of 74%.
That's in management's ideal zone; Coca-Cola's chief draw for investors is its rock-solid passive income stream. In general, management devotes about three-quarters of its earnings to creating shareholder value through the dividend and keeps what's left to run the business. In 2020, it paid out nearly all of its earnings as dividends, raising the dividend despite a steep decline in sales and profits.
Management is guiding for increased sales and profits in 2024 despite continued pressure, and it doesn't look like there's any danger to its dividend. Coca-Cola has about 4.3 billion shares outstanding, and with the dividend at $1.94 per share, that will be nearly $8.4 billion in total dividend payments this year. Shareholders can expect that to continue and to benefit from Coca-Cola's robust dividend for the foreseeable future.
