The Coca-Cola Co (NYSE:KO) is a little like your heart or your pancreas. You don’t consider it particularly exciting or sexy, but you know it’s always there, performing.
The company has been around since the 1800s producing its sweet elixirs, and there’s no indication that it’s going anywhere anytime soon.
Here are a few reasons why KO stock should be a part of your portfolio.
New Products Mean New Revenue Streams
Sure, there’s classic Coke, Diet Coke, Cherry Coke and Coke Zero. But KO is much more than its eponymous soda products. The company actually includes more than 500 nonalcoholic beverage brands ranging from waters to juices to coffees and everything in between.
Coca-Cola’s latest beverage brand is in the form of milk. Yes, milk. And if you’re thinking the powers that be at the world’s largest beverage company have lost their minds, just consider that milk is a $100 million business in the U.S. alone.
What separates KO’s Fairlife milk from other brands is that it’s ultra-filtered, lactose-free, has 50% more protein than regular milk, 30% more calcium and half the sugar. If the product catches on, it could be a great revenue generator.
Two relatively new KO tea brands, Gold Peak and Fuze — along with I LOHAS mineral water sold in Japan — crossed the $1 billion mark in 2014, bringing the number of billion-dollar brands in KO’s portfolio to 20.
KO Is a Proven Dividend-Paying Value Stock
Maybe KO is a bit pricey compared to its competitors, carrying a price-to-earnings ratio of 25, compared to PepsiCo, Inc.’s (NYSE:PEP) and Dr Pepper Snapple Group, Inc.’s (NYSE:DPS) 22. Still, there is one area where the company can’t be beaten, and that’s in the dividend it pays. KO recently increased its dividend 8%, bringing the yield up to 3.3%.
Although net revenues for all segments were down for the quarter, KO’s net revenue for its North American segment was up 2% to $5.37 billion. This is good news for Coca-Cola, since the North American segment is four times the size of the next largest, apart from bottling operations.
Despite its size and storied history, it’s nice to know that KO still concerns itself with growing revenue — and that’s exactly what the company is in line to do, according to analysts. Revenue is expected to increase 1.1% in 2015.
Brand Familiarity and Synergy Bode Well for Growth
It doesn’t matter if you’re in Toronto or Timbuktu, chances are you’ve heard of Coca-Cola and have tried at least one of its products. This translates to staying power. People won’t stop buying Coca-Cola products overnight.
Yes, sales of soda have been slumping for the past decade. But Coca-Cola recognizes the problem, and that’s why it’s launching new products and reinventing itself with brands like Coca-Cola Life and Fairlife milk.
Then there’s the fact that KO has partnered with Apple Inc. (NASDAQ:AAPL) to enable Coca-Cola vending machines to accept Apply Pay, a mobile payment system that allows customers to use their phones. There are currently about 20,000 machines capable of accepting Apple Pay with about 100,000 expected to go online
KO still reigns supreme in the nonalcoholic beverages market and its attractive dividend reflects that. So if you’re looking for a value stock that has stood the test of time and by all indications will continue to do so, you can’t go wrong with KO stock.
As of this writing, Will Emerson did not hold a position in any of the aforementioned securities.
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