02-17-2014, 01:47 PM
I always have trouble understanding the fascination with KO.
I understand that past results are no guarantee of future returns, but look at the past results. I use Morningstar for most of my data, and here is what Morningstar says about the 15 year annualized total return of KO, and of some of its consumer staples competitors.
KO: 2.85%
HRL: 12.01%
GIS: 7.67%
PEP: 6.66%
The reason KO has done so poorly over the long term is that it is almost invariably over priced. But that was then, what about now? Following are current yields and P/E ratios from Morningstar and 5 year normal P/E ratio from FAST Graphs:
KO: 2.88% 20.33 21.6
HRL: 1.84% 23.4 19.0
GIS: 3.05% 18.81 17.2
PEP: 2.91% 17.95 18.6
On these numbers alone, GIS and PEP are a better value than KO and a much better value than HRL.
What about dividend growth? 5 year dividend growth from Morningstar:
KO: 8.45%
HRL: 12.94%
GIS: 10.95%
PEP: 8.35%
If dividend growth is your primary criteria, then HRL is the best of this bunch. For my money, the winner is GIS, which has paid a dividend every year for the last 115 years, and has never reduced its dividend.
I understand that past results are no guarantee of future returns, but look at the past results. I use Morningstar for most of my data, and here is what Morningstar says about the 15 year annualized total return of KO, and of some of its consumer staples competitors.
KO: 2.85%
HRL: 12.01%
GIS: 7.67%
PEP: 6.66%
The reason KO has done so poorly over the long term is that it is almost invariably over priced. But that was then, what about now? Following are current yields and P/E ratios from Morningstar and 5 year normal P/E ratio from FAST Graphs:
KO: 2.88% 20.33 21.6
HRL: 1.84% 23.4 19.0
GIS: 3.05% 18.81 17.2
PEP: 2.91% 17.95 18.6
On these numbers alone, GIS and PEP are a better value than KO and a much better value than HRL.
What about dividend growth? 5 year dividend growth from Morningstar:
KO: 8.45%
HRL: 12.94%
GIS: 10.95%
PEP: 8.35%
If dividend growth is your primary criteria, then HRL is the best of this bunch. For my money, the winner is GIS, which has paid a dividend every year for the last 115 years, and has never reduced its dividend.