Can Coke Ever Be Relevant Again?
The company has increased its dividend for an incredible 58 straight years putting in some very elite company. Coke now yields a dividend of 3.40%, a figure that is as steady as it gets for the current environment.
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Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2020-08-26 10:04

When most of us think of enjoying an ice cold soda, the iconic red Coca-Cola can is probably one of the first ones we would reach for. For decades now Coke has been a staple of the consumer goods industry and a rock solid member of the Dow Jones Industrial Average which is seen as a sort of measurement of American consumerism and culture. The company has increased its dividend for an incredible 58 straight years putting in some very elite company. Coke now yields a dividend of 3.40%, a figure that is as steady as it gets for the current environment. But in a landscape of hyper-growth and big tech stocks, how relevant is Coca Cola in this new age of internet investing?

The short answer is not very relevant. Sure, it is a foundational stock in America, one which investors have owned for generations as a centerpiece of their portfolio. But in this day in age soda is seen as unhealthy and has been losing significant market share of the beverage industry every single year. Unlike its main rival PepsiCo (NASDAQ:PEP), has branched out from sugary drinks and extended its reach into salty snack foods and other consumable goods. During the COVID-19 quarantine, PepsiCo launched its snack food website called Snacks.com from which people can directly order any of its snacks or beverages to be directly delivered to people’s homes. Despite Coca Cola’s unparalleled supply chain and global distribution streams, its E-Commerce presence is minimal, which gives PepsiCo an unrivaled share of this burgeoning market.

Coca Cola recently announced that it would be distributing a new hard seltzer in Latin America under its popular Topo Chico brand, with plans to later bring these products to America as well. But hard seltzers have been popular in America for years now and definitely does not seem like a niche market that people would turn to Coca Cola for. The company has been rumored for years to be getting into the CBD infused market, but Coke has failed to act upon these rumors, instead doubling down on existing products like Diet Coke.

But Coke will always survive, no matter how out of touch it may seem. The Coca Cola brand is one of the strongest and most recognizable brands in the world and the stock remains one of Warren Buffett’s largest holdings through his company Berkshire Hathaway (NYSE:BRK). But over the past twenty years the stock is up only 68%, which lags the Dow Jones gains of 154% during that same timeframe. On top of this, Coke has been throttled by PepsiCo as the latter has almost quadrupled in stock price and matched Coke’s steady dividend as well. With the recent shuffling of companies within the Dow Jones, some are arguing that PepsiCo should be the consumer goods stock over Coca Cola. While investors can be assured Coke will never go away, it has certainly been a long time since it has been a relevant stock to own.


Disclaimer: I am long on KO. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2020-08-26 10:04

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About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

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