Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Coca-Cola (KO)!
#41
KO is looking like a decent, low risk covered call play to me. Buy at $37.30 and sell August calls for $1.10. Shares should kick out at least 84 cents in dividends before expiration. Plus skim about 70 cents in capital gains if called. Gross about 7% if called in August. Juice the annual yield to over 5% if not called.
Alex
Reply
#42
KO increases dividend from .28 per quarter to .305 per quarter. Almost a 9 percent raise. Not too shabby for a company in decline. Tongue

I'm working my ass off and I can't even dream of a 9 percent raise at my job. Meanwhile my KO shares give me that raise just because I'm a nice guy.
Reply
#43
Yes, it gave a 9% raise, but that is in the context of the company which was only paying something kin to minimum wage. Your day job probably pays so much more than minimum wage, that even a 2% raise does you more good than the 'gift' from coke. I just have such a hard time getting excited about 3% yielding stock.
Alex
Reply
#44
Well, sure, a 2% raise on a large base is more dollars than a 9% raise on a small base. But, if all goes to plan, there will come a day when the income I receive from my stock portfolio is close to or more than the income I receive from my labor. At that point, the bases will be the same, and the dividend raises I get will make my salary increases seem shabby in both percentage and absolute terms.

I agree that 3% is not that exciting, but I am convinced that dividend growth also entails price appreciation, and that when you allow those to do their work for a long period of time, you're going to do well.
Reply
#45
I'm hoping that kind of math works for everyone. Plus as some have said, at retirement time there can always be a transition of some holdings that have modest dividends (but have large capital gains) into more traditional income stocks. I'm convinced that over a long time frame that the DG types of stocks will give a greater total return than many of the traditional income stocks such as utilities and telecoms. As one nears retirement however, the risk of a prolonged and severe down market is too great to not have a decent allocation into the higher yielding, lower growth domain.
Alex
Reply
#46
(02-20-2014, 01:51 PM)hendi_alex Wrote: Yes, it gave a 9% raise, but that is in the context of the company which was only paying something kin to minimum wage. Your day job probably pays so much more than minimum wage, that even a 2% raise does you more good than the 'gift' from coke. I just have such a hard time getting excited about 3% yielding stock.

A company that has given raises for decades.

I disagree with your contextual statement, particularly given the many stock splits over the past decades.
Reply
#47
That disagreement is what makes a market!

Ten year total return is not overly impressive to me.

[Image: 12664383923_4961624dc0_o.png]
Alex
Reply
#48
KO 5-year dividend growth rate - 8.1%

I like that kind of pay raise - and KO has been pretty consistent over the years.

I am looking for reliable growth in income more than I am in total return. Add a second layer of compounding by reinvesting the dividends, and I am a happy camper. It is one of my lower current dividend yield stocks, but it has a place in my portfolio.

KO just announced a 9% dividend increase today - that is about 3 times the inflation rate.

That's what I am talking about Smile
Reply
#49
(02-20-2014, 05:20 PM)hendi_alex Wrote: That disagreement is what makes a market!

Ten year total return is not overly impressive to me.

[Image: 12664383923_4961624dc0_o.png]

KO traded at a PE of around 33 at the beginning of 2004, which is roughly 50% higher than its typical PE and yielded just 2%. So even by overpaying by 50% you were still able to beat the market's returns over the last decade.

Now its trading below at a 20 PE and yielding nearly 3.3%.

Long KO.
Reply
#50
Consumer tastes have made a dramatic shift, away from carbonated drinks. Some are saying that is a permanent shift as consumers choose more healthy alternatives. For sure that dynamic adds to the uncertainty faced by Coke which has only modestly performed over the past decade, as compared to the previous decade. Just for the fun of it, I typed in several tickers semi randomly, picked from big cap list and picked from my portfolio. Here is how they compared to KO over the past decade.

T - beat
KMP - crushed
XOM - beat
RYN - crushed
CSCO - significantly under performed
POT - crushed
EMR - beat
MCD - crushed

I may use KO as an occasional covered call play, but doubt that I'll ever hold it in my long term dividend portfolio.
Alex
Reply




Users browsing this thread: 1 Guest(s)