Coca-Cola: There’s Little Reason To Own It


  • Coca-Cola has underperformed the S&P 500 by a huge margin in the last 10 years, yet still trades at a lofty 24x P/E.
  • Some investors are too focused on dividend growth and are ignoring that it’s mostly coming from an increasing payout ratio rather than higher earnings.
  • Sugary drink taxes could be a major headwind to growth over the next decade.
  • I believe KO will continue to underperform the broader market in the future.

Coca-Cola Reports Strong Quarterly Earnings

Justin Sullivan

Coca-Cola (NYSE:KO) is a well-known company with a brands everyone knows. Many investors love it for the yearly dividend increases, and think that because Buffett owns it, it’s a great choice for a low risk, stable investment.

Data by YCharts

KO Financials

KO Financials (SeekingAlpha)

US Per Capita Soft Drink consumption

US Per Capita Soft Drink consumption (Statistica)

KO Earnings Projections

KO Earnings Projections (SeekingAlpha 2/12/23)

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Indirect ownership through Berkshire Hathaway

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