S&P 500 Dividend Stocks Down 7%, Buy 1 Gorgeous Stock to Hold Forever

Standard & Poor's 500 The index has been doing well lately. Last year, the index rose by about 25%.

However, certain stocks are lagging behind. During this period, theCoca-Cola Company (NYSE: KO)The stock price fell 7%.

A stock price that lags the market does not necessarily mean a buying opportunity. After all, the stock market has been proven to work like a charm. But in this case, dividend-seeking investors should seize the opportunity to buy Coca-Cola stocks.

It's time to reveal why you should invest your hard-earned money.

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Coca-Cola has become more than just a soda company. It sells a range of popular beverages such as water, sports drinks and juices. Brands include Coca-Cola, Sprite, Dasani and Juice Source.

Of Coca-Cola's sales last year, 69% came from soda, but about one-third came from other beverages. Because of its size and brand awareness, Coca-Cola has a dominant position among most of its competitors. Its main competitors arePepsiCoThe latter also sells snacks and convenience foods.

Despite this, Coca-Cola's revenues and profitability continue to grow. Excluding foreign exchange and acquisitions/divestitures, adjusted revenue grew 12%. Price increases accounted for the bulk of the growth, but sales volume also contributed 3 percentage points. Management expects revenues to grow 6% to 7% this year, and the increase in revenues resulted in a 20% increase in adjusted operating income.

Dividend increase

Coca-Cola's higher profitability translates into free cash flow (FCF). Last year, Coca-Cola generated $9.7 billion in free cash flow.

The company utilizes these lucrative FCFs to reward its shareholders. So while Coca-Cola's business may not be as exciting to investors as a fast-growing company, it is doing something that many companies in the early stages of development cannot. Coca-Cola's investors have been paying increasing dividends.

A few months ago, the Board of Directors announced a dividend increase of 5.41 TP3T, which I think is a positive sign that management is looking ahead. It also marks the 62nd consecutive year that Coca-Cola has increased its dividend. This makes Coca-Cola the king of dividends. This elite group is made up of companies that have increased their dividends for at least 50 consecutive years.

Coca-Cola stock has a dividend yield of 3.31 TP3T, which is more than double the S&P 500's 1.41 TP3T.

stock valuation

Since early October, the share price has risen. However, this has not deterred income investors from entering the market.

The stock's price-to-earnings ratio is about 24. A year ago, it was about 28, compared with 28 for the S&P 500.

It is an impressive feat for a company to not only pay a steady dividend, but to raise it year after year. The Coca-Cola Company has done this for more than six decades, in good times and bad. These have included severe recessions, hyperinflation, stagflation and pandemics, to name a few. Coca-Cola's steady growth in profits doesn't look like it's going to stop anytime soon.

Coca-Cola's stable business, strong product sales, strong cash flow, and relatively attractive valuation make it look like an attractive investment choice. That way, you can enjoy dividends for years to come.

Should you invest $1,000 in Coca-Cola now?

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Lawrence Rothman, Chartered Financial Analyst (CFA) does not hold any of the above shares.The Motley Fool does not hold any of the above shares.The Motley Fool has a disclosure policy.

標普 500 指數股息率下降 7%，買入竝永久持有 1 衹華麗的標普 500 指數股息率下降 7%》最初由 The Motley Fool 發佈。