These days, investors have valid concerns about the stock market's valuation. The ongoing artificial intelligence boom also adds fears about possible disruption. It doesn't help that the broader economy is characterized by heightened uncertainty.
This supports the view that it's time for investors to consider opportunities that generate consistent income. If this sounds like the approach you're interested in, look at Coca-Cola (KO -0.45%).
This Dividend King stock yields 2.55%, more than double the yield of the S&P 500 index, and it just raised its dividend for the 64th straight year.
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Showing a firm commitment to shareholders
In February of this year, Coca-Cola's board of directors gave investors a reason to cheer. The business hiked its quarterly dividend payout 4% to $0.53. This is the 64th consecutive year that such a move was made. That shows an incredible commitment to the company's shareholders.
Since the start of 2010, Coca-Cola has returned almost $102 billion to investors via dividend payments. This equals 28% of the current market cap.
If a business is able to build a monster streak like this one, it's a clear sign of its consistency and staying power. Coca-Cola has stood the test of time, operating through numerous periods of uncertainty, including wars, recessions, and technology cycles, only to continue its success. Investors have every reason to be confident that this business will still be dominating the beverage market a century from now.
Coca-Cola's impressive profits also virtually eliminate the risk of the dividend being suspended. In the past decade, the company has reported an average quarterly operating margin of 26.9%. It generates sizable cash flow, giving it the financial horsepower to continue returning capital to shareholders. Not even the black swan event of the pandemic that derailed the global economy in 2020 disrupted Coca-Cola's ability to pay its dividend.
NYSE: KO
Key Data Points
Set the right expectations
You've now decided that adding Coca-Cola to your portfolio is the right move. This is a safe stock to buy and hold. It will certainly provide valuable peace of mind.
However, it's important for investors to set the right expectations. Coca-Cola's shares are unlikely to beat the market over the long term. In the past decade, the beverage giant produced a total return of 152%, meaningfully lagging the S&P 500 index. There's no reason to believe the future will be any different.
That's because Coca-Cola is an extremely mature company. It essentially has universal adoption, as it's in more than 200 countries and territories. This naturally limits growth potential.
Don't be discouraged, though. This is a competitively advantaged, predictable, and highly stable business that dividend investors can own with confidence.
