On June 15, 2023, Coca Cola will pay the second dividend of 2023 in cash to shareholders at a rate of 0.46 per share. The dividend will be paid on July 3, 2023.
That payment would yield about 3.07%, based on the stock price on June 2, 2023. That's an attractive yield, nearly double the dividend yield of the S&P 500 (recently around 1.6%).
Coca-Cola generated about $9.5 billion in free cash flow (after capital expenditures or investments), easily covering its annual dividend payment of about $7.6 billion. That leaves the company with some surplus cash to allocate to other initiatives that increase shareholder value.
Coca-Cola is building its leadership position in the global beverage industry, with a market capitalization of $259.47 billion. Over the past 12 months, the beverage stock has traded at $60.00 (June 1, 2023) and a P/E ratio of 26.43. KO stock has a low of $54.02 and a high of $65.47 over the past 12 months.
Citigroup raised its price target on Coca Cola from $71.00 to $74.00 in a research note on April 24. Barclays raised its price target on Coca Cola from $72.00 to $73.00 in a research note on April 26. Royal Bank of Canada set a $69.00 price target on Coca Cola shares in a research note on February 14.
According to MarketBeat.com, Coca Cola currently has a consensus rating of "Moderate Buy" and a consensus price target of $67.80.
Coca-Cola's first-quarter 2023 earnings and revenue beat estimates. Listed share price: $60.00 (June 1, 2023). Ex-dividend date: July 3, 2023. Dividend: $0.46/share. Dividend yield: 15.33% with a 1:20 margin. Earnings per share were 68 cents, compared to estimates of 64 cents. Revenue was $10.96 billion, compared to estimates of $10.8 billion. Net income was $3.11 billion, or 72 cents/share, up from $2.78 billion, or 64 cents/share, in the same period last year. Excluding restructuring costs, tax issues and other items, Coca-Cola earned 68 cents/share.
Net sales rose 5% to $10.98 billion. Excluding the impact of acquisitions and divestitures, sales rose 12%, driven largely by higher beverage prices. Carbonated soft drink sales volume grew 3%, soda water also rose 3%, while sugar-free soft drinks increased 8%.
Coca-Cola’s average selling price rose 11% in the first quarter, compared with a 16% increase for rival PepsiCo Inc. However, the price hikes did not impact demand for Coca-Cola products. The maker maintained its 2023 forecast of 7-8% revenue growth and 4-5% profit growth.
The company maintains a portfolio of more than 200 brands sold in most countries and territories. Coca-Cola has a very strong balance sheet, as evidenced by its A-rated bonds. The beverage giant's dividend payout ratio is expected to be less than 71% in 2023.
The company currently has more than $11 billion in cash and a low leverage ratio of 1.8 times. That gives the beverage giant the flexibility to continue investing in business expansion and dividends, allowing Coca-Cola to deliver attractive total returns.
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