Spend enough time studying index inclusion rules, and investors will learn that one requirement for entry into the S&P 500 is that the company be based in the U.S. That's not the case with the Nasdaq-100 index, which allows foreign companies to be included.
Granted, the smattering of ex-U.S. companies in the Nasdaq-100 is small. Just 3% of the index's weight, but there are some interesting names among that group, including some for dividend investors. Enter Coca-Cola Europacific Partners (CCEP -0.56%).
This Coca-Cola bottling stock could become a dividend star over the long term.
For those who aren't familiar with this company, it's the world's largest independent bottler, by revenue, of Coca-Cola (KO -0.39%) products, and yes, the ties extend to the financial realm, as "big Coke" owns about 19% of this international bottling firm. Now, let's get into the fun part, including the dividend.
Coke ties and a solid dividend
Coca-Cola is beloved by dividend investors due in large part to its status as a Dividend King, or one of the companies that has raised payouts for at least 50 consecutive years. The beverage giant's streak of dividend increases spans an impressive 64 years.
A lot of stocks, including Coca-Cola Europacific Partners, have a long way to go to get to that pantheon. But this international Coke bottler has an interesting story to tell. It's been paying dividends for a decade, and there are tangible signs of growth. With a dividend yield of about 2%, this is by no means a high-dividend stock, but its yield is more than quadruple that of the Nasdaq-100.
All right, so that's not saying much, because that index is notoriously low-yielding due to its large weight in growth stocks that pay paltry or no dividends. Still, there's a lot of long-term potential with the Coca-Cola Europacific Partners dividend. It's considered extremely safe, and the company's payout ratio is just 34%, implying there's room for growth and the dividend isn't a burden.
NASDAQ: CCEP
Key Data Points
Those are among the reasons why long-term dividend investors may want to examine this stock, particularly since it is enduring a correction. It's down 10.5% from its 52-week high, but even with that pullback, it's up 12.2% year to date, or more than double the returns offered by the largest consumer staples exchange-traded fund (ETF). The bottler is also a dedicated buyer of its own shares, which lifts earnings per share (EPS) while decreasing the number of shares on which dividends must be paid.
Bet on the bottler
Coca-Cola is one of the most venerable dividend stocks on the market, and it's appropriate for any number of investors, but bottlers are paramount to the company's success. Including Europacific Partners, the top-five Coke bottlers account for more than half of the soft drink behemoth's global volume.
With exposure to three continents, including footprints in mature regions such as Western Europe and some emerging markets, Europacific Partners is a vital cog in the broader Coca-Cola ecosystem.
Another reason to consider betting on the bottler is its debt-reduction efforts, which could support dividend growth. Net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to decline to 2x next year, then to 1x in 2030.
