Coca-Cola Boosts Quarterly Dividend By 2.4%; Street Sees 12% Upside

Coca-Cola raised its quarterly cash dividend by 2.4% to $0.42 per share. This marks the beverage company’s 59th consecutive year of dividend increases.

Coca-Cola (KO) announced that the new dividend will be paid on April 1, to shareholders of record as of March 15. Shares closed at $50.77 on Feb. 18, up nearly 1.3%.

The company’s annual dividend of $1.68 per share now reflects a dividend yield of 3.3%.

On Feb. 10, Coca-Cola reported 4Q results. The company’s 4Q adjusted earnings increased 6.8% to $0.47 per share on a year-over-year basis and beat Street estimates of $0.42 per share. Adjusted net operating revenues decreased 5.5% to $8.6 billion, falling just shy of analysts’ expectations of $8.63 billion. For 2021, the company projects adjusted EPS to grow in the high single-digit to low double-digit percentage range. (See Coca-Cola stock analysis on TipRanks)

On Feb. 10, Merrill Lynch analyst Bryan Spillane maintained a Buy rating and a price target of $56 (10.3% upside potential) on the stock. The analyst considers the company’s “premium” valuation “justified” compared to “non-alcoholic beverage peers” as he expects Coca-Cola to “emerge from the crisis in a stronger position.”

“As global vaccinations improve and other re-open related stocks begin to outperform,” Spillane believes “there will be a catch up trade for KO shares which have underperformed both peers and the broader market so far this year.”

Wall Street analysts are cautiously optimistic about the stock. The Moderate Buy consensus rating breaks down into 6 Buy ratings versus 5 Hold ratings. The average analyst price target stands at $57 and implies upside potential of about 12% to current levels. Shares have increased 7% over the last six months.

Coca-Cola scores a 9 out of 10 from TipRanks’ Smart Score system, indicating that the stock has strong potential to outperform market expectations.

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