Coca Cola Stock Shows Resilience In A Turbulent Market

  • Coca Cola stock has barely budged during the recent market plunge.
  • Coca Cola's solid dividend, and record of covering that dividend, makes it a conservative choice.
  • Don't think sugar, think clean, potable water.

The Pause That Refreshes was a Coca Cola (NYSE:KO) slogan at the time of the 1929 stock market crash. Whenever the market collapses, as it has early this year, it’s a good thing to remember. Coca Cola stock has barely budged during this collapse. While many tech stocks are down 10% or more, like Amazon (NASDAQ:AMZN) for instance, which is down by over 15%, Coca Cola stock is down only 3.7%. This has made it even more attractive, with a yield of almost 3.2%, while the U.S. 10-year bond has fallen to a yield of below 2%.

KO stock chart

Coca Cola stock price chart by

This comes from steady performance. Coca Cola always has plenty of earnings to afford its dividend - $1.90/share covered $1.22 per share in dividends during 2014, and $1.39/share in earnings covered 99 cents in dividends for the first three quarters of 2015. The company generates a steady $10 billion in cash flow each year from operations, and it makes something people won’t scrimp on when times get tight.

That something is water. While Coca Cola is known as a soft drinks company, it has really been in the business of clean, potable water ever since the early 1920s, when during a battle between bottlers and syrup producers, CEO Robert Woodruff challenged both to make sure each Coca Cola tasted the same, no matter where it was purchased.

The answer to the challenge was water treatment. Coca Cola’s Dasani brand has about 10% of the U.S. market for bottled water, making it the brand leader. Coca Cola’s share of the soda market stood at 43.4% in 2014, and it distributes some smaller brands, making Coca Cola's share of what is distributed, nearly 47%.

Despite the impressive performance, Coca Cola remains dissatisfied. It is constantly buying, combining, and spinning-off its bottlers, depending on the financial season. CEO Muktar Kent, an Egyptian, is expected to give way soon to James Quincey, a 50-year old Englishman known for improving profits and market share in Europe despite the recent upheavals there. Coca Cola, in other words, is in good hands.

Quincey’s latest move is to give all of Coca Cola’s various Coke products, including low-calorie brands, the same look-and-feel, the cans using the same logo and, eventually, the same general color scheme. The slogan is also changing to “Taste the Feeling” in order to de-emphasize the issue of sugar. The idea is that calories move from being a brand to being a feature for Coca Cola.

And if you’re wondering what power Coca Cola has to move minds, note that today’s image of Santa Claus – the jolly old guy in a red suit – was launched by Coca Cola in the 1930s in drawings by artist Haddon Sundblom. That’s why his costume is that particular shade of red.

The point is that regardless of what the market does, and regardless of what happens with global diets, Coca Cola will continue marching forward, paying dividends and delivering returns. Coca Cola is a refreshing place to park your money during a market pause like this one.

Dana Blankenhorn Dana Blankenhorn   on Amigobulls :
Author's Disclosures & Disclaimers:
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
  • See Amigobulls' policy on anonymous authors who use a pseudonym
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

At Amigobulls, we prefer that our authors disclose their real names. However, due to a variety of reasons, author's may prefer otherwise. Recognizing the fact that the ideas conveyed carry greater significance, and to facilitate the dissemination of these ideas, we allow authors to use a pseudonym. However, we do collect the same of details from anonymous authors, as we do from others, like the author's real name and contact information. Of course, this information remains confidential with us, and is not displayed on the site.
Further, to protect the interests of our readers/viewers, anonymous authors are required to make the same set of disclosures as other authors. For more details, you can write to any of our in-house editors at

show more

Comments on this article and KO stock

user profile picture
Your comment about Coke not dropped is irrelevant. Your time frame is too narrow. How has KO performed against the market the past 3-5 years? Pretty poorly
1 reply
Do share this awesome post