September 04, 2025 a 07:32 am
KO: Dividend Analysis - The Coca-Cola Company
The Coca-Cola Company, with its robust dividend history and solid market capitalization, remains an attractive option for dividend-seeking investors. With a dividend yield of approximately 2.92% and a 56-year history of increasing dividends, it suggests reliability and consistency. However, notable points include a high EPS payout ratio and negative free cash flow yield which necessitate a more detailed examination of cash flows.
📊 Overview
The Coca-Cola Company operates in the Beverage sector with a diverse product offering worldwide. Its current dividend yield stands at 2.92%, with a current dividend per share of $1.94. Having consistently paid dividends for 56 years, Coca-Cola underscores financial fortitude. Notably, the last recorded dividend cut or suspension is none, highlighting their commitment to shareholder returns.
| Factor | Detail |
|---|---|
| Sector | Beverage |
| Dividend yield | 2.92% |
| Current dividend per share | 1.94 USD |
| Dividend history | 56 years |
| Last cut or suspension | None |
📈 Dividend History
Understanding the dividend history provides insights into past commitments and reliability. With a 56-year track record, Coca-Cola is a clear leader in dividend longevity, providing reassurance for income-focused investors.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.53 |
| 2024 | 1.94 |
| 2023 | 1.84 |
| 2022 | 1.76 |
| 2021 | 1.68 |
📉 Dividend Growth
The historical dividend growth rate highlights the company's ability to increase shareholder returns over time. Coca-Cola's dividend growth over the last 3 and 5 years has shown a trend of modest increases, indicating stable fundamental performance.
| Time | Growth |
|---|---|
| 3 years | 4.91% |
| 5 years | 3.93% |
The average dividend growth is 3.93% over 5 years. This shows moderate but steady dividend growth.
⚠️ Payout Ratio
The payout ratios are critical to assess the sustainability of dividends. A high EPS-based payout ratio of 68.52% suggests prudent dividend payments relative to earnings, whilst the FCF-based ratio is negative due to possibly aggressive capital expenditure. Investors should monitor the cash flow closely going forward.
| Key figure | Ratio |
|---|---|
| EPS-based | 68.52% |
| Free cash flow-based | -1156.32% |
High EPS payout ratio suggests dividends remain sustainable through earnings, but negative FCF payout indicates potential cash flow issues if continued long-term.
✅ Cashflow & Capital Efficiency
Examining Coca-Cola’s cashflow and capital efficiency reveals insights into operational effectiveness and investment returns. The free cash flow yield and the operating cash flow coverage ratio need improvement for sustainable long-term growth, while their return on capital remains consistently strong.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 1.77% | 3.83% | 3.46% |
| Earnings Yield | 3.96% | 4.21% | 3.47% |
| CAPEX to Operating Cash Flow | 30.33% | 15.97% | 13.47% |
| Stock-based Compensation to Revenue | 0.61% | 0.56% | 0.83% |
| Free Cash Flow / Operating Cash Flow Ratio | 69.67% | 84.03% | 86.53% |
| Return on Invested Capital | 10.46% | 11.54% | 11.73% |
The cashflow indicators suggest substantial reinvestment back into the business, with capital efficiency remaining effective. However, cash flow coverage should be monitored for maintaining dividend stability.
⚠️ Balance Sheet & Leverage Analysis
The balance sheet of Coca-Cola reveals its strategic leverage usage to amplify returns, though the financial leverage ratio suggests a need for disciplined debt management.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 1.84% | 1.67% | 1.68% |
| Debt-to-Assets | 45.49% | 44.45% | 43.77% |
| Debt-to-Capital | 64.79% | 62.60% | 62.75% |
| Net Debt to EBITDA | 2.21 | 2.18 | 2.25 |
| Current Ratio | 1.03 | 1.13 | 1.15 |
| Quick Ratio | 0.84 | 0.95 | 0.93 |
| Financial Leverage | 4.05 | 3.77 | 3.85 |
While the leverage ratios are within industry norms, they imply continued attention for maintaining financial flexibility. Adequate liquidity ratios provide comfort in meeting short-term obligations.
✅ Fundamental Strength & Profitability
The company's profitability metrics, including strong returns on equity and assets and healthy profit margins, confirm Coca-Cola's operational efficiency and market strength.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 42.77% | 41.30% | 39.59% |
| Return on Assets | 10.57% | 10.97% | 10.29% |
| Net Profit Margin | 22.59% | 23.42% | 22.19% |
| EBIT Margin | 31.32% | 31.64% | 29.23% |
| EBITDA Margin | 33.61% | 34.11% | 32.16% |
| Gross Profit Margin | 61.06% | 59.52% | 58.14% |
| R&D to Revenue | 0% | 0% | 0% |
The robust profitability metrics underpin Coca-Cola's competitive edge, suggesting sustainability in its dividend policy due to strong underlying fundamentals and market presence.
📈 Price Development
🗣️ Dividend Scoring System
| Category | Score | |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 3 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Overall Score: 31/40
🏆 Rating
Overall, Coca-Cola is a strong performer in terms of dividend sustainability, driven by substantial stability and a long history of consistent payouts. While growth is moderate, it is underpinned by strong fundamentals, making it a suitable choice for income-focused investors seeking reliable returns. The recommendation would be to hold for stable income generation while monitoring cash flows for any shifts in economic conditions.