The Long Investor
Airline Captain & Investment Analyst, Technical/Fundamental Analysis
Coca-Cola is the ultimate safe haven, a holding that stabilizes and protects a portfolio. Since 2008 the best spot to add has been at or under the 200-week moving average; the test of that level at $60 in November 2024 signaled value with a margin of safety. Shares have since reached $84, a 39% climb in 20 months, plus a 2.5% dividend. x.comÂ
Coca-Cola may be the best defensive stock on the planet, with the simplest business model and a brand known everywhere from New York City to tiny villages in Asia. x.comÂ
Coca-Cola is one of the best businesses ever built and will very likely still deliver investment results 50 years from now. It is far more than sugar water: it owns 500+ brands, including Dasani and Smartwater, and 32 billion-dollar brands. x.comÂ
Coca-Cola's retained earnings do little for shareholders when management does not distribute much of the growth. At 27 times earnings, a 2.3% yield with no expected large dividend hikes, special dividend or meaningful buybacks makes look-through earnings a poor basis for the price: EPS rose about $1 in five years while dividends rose only 52 cents. x.com x.com x.com x.comÂ
Coca-Cola's business is healthy, but its headline quarter overstates it, so the stance is bullish-neutral. Global volume rose 5%, free cash flow hit $6.9B year to date, and the dividend is covered at about 72% of free cash flow. But EPS grew 16% while currency-neutral comparable EPS grew 9%, underlying margin expansion was 24bp rather than about 90, and Asia Pacific price/mix fell 9% to defend shelf space. The raised 9-10% EPS growth guide includes about 3 points of currency tailwind. x.comÂ
Berkshire Hathaway benefits from a flight to low-beta quality stocks that are not burdening themselves with AI debt. Its shares are up 10% in October, while three of its largest holdings, Apple, Coca-Cola and Chevron, have been surging. Boring pays. x.comÂ
Coca-Cola's $20 billion-plus tax liability under litigation is significant for a low-margin business; a billion-dollar tax penalty helped sink VF Corp. The stock has lagged the S&P 500 even from the best entries of the past 15 years, having run out of growth since globalization peaked, and its 2.67% dividend is weak against safe, growing alternatives. Spinning off and reacquiring bottlers has handed the alpha to others. x.comÂ
Nvidia, American Express, Cheesecake Factory, Microsoft, Broadcom, UnitedHealth and Coca-Cola are incredible stocks that also pay you dividends while you own them, a way to make money while you sleep. Current yields: Nvidia 0.48%, American Express 1.05%, Cheesecake Factory 1.45%, Microsoft 0.91%, Broadcom 0.69%, UnitedHealth 2.19% and Coca-Cola 2.50%. x.com x.com x.com x.com x.com x.com x.comÂ
PepsiCo is an easy buy for a long-term dividend portfolio because its diversified brands can adapt to shifting health trends. Gatorade, soda, snacks and energy drinks are categories people will never stop consuming, and the recent Poppi purchase shows that adaptability, making PepsiCo preferable even to McDonald's. @TheRonnieVShow notes the stock sits on a 17-year trendline that has held since 2009. x.com x.comÂ
Coca-Cola's valuation is no longer compelling despite strong operational execution. Shares trade at about 26.7 times earnings versus a historical average of 22.3, so much of the near-term optimism is priced in. Continued earnings growth can support the premium, but the margin of safety is considerably smaller. x.comÂ
PepsiCo's valuation discount to Coca-Cola doesn't make sense: it trades at 17.75x earnings versus Coca-Cola's 26.70x, whatever one thinks of their sodas. x.comÂ
