Published Fri, 11 Jan 2019 15:07:29 -0500 on Seeking Alpha
Coca-Cola (KO) has raised its dividend at a slow pace in the last five years. This is natural, given the absence of earnings growth over this period. However, the company recently returned to its long-term growth trajectory. Therefore, the big question is whether the company will accelerate its dividend growth next month when it announces its next dividend hike.
Coca-Cola has dramatically underperformed the market in the last five years. During this period, the stock has gained 12%, whereas the S&P has rallied 52%. The reason behind this disappointing performance is the decrease in the revenues and earnings throughout this period. Since 2013, the revenues of Coca-Cola have decreased 31% while its earnings have remained essentially flat. The plunge in revenues can be mostly attributed to the re-franchising of the bottling operations, but the absence of growth in the bottom line is certainly disappointing.
As the beverage giant has essentially expanded in every single country in the world, it has become very hard to continue to grow at a decent pace. In addition, consumers are becoming increasingly health-conscious every year. Consequently, they tend to reduce their consumption of soda. To be sure, the U.S. soda consumption per capita has fallen to a 30-year low level, while the total U.S. soda consumption has decreased for 12 consecutive years. As the flagship segment of Coca-Cola still generates about half of its total sales, the above secular trend is... Read more