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I forgot to post here last week, but I picked up some KO on Thursday. Sold out of my Gannett (GCI) and bought Coca-Cola.
I think its a good entry point near a 3% yield with a dividend boost expected with the next announcement. I also like the move to partner with GMCR on the future in-home beverage system. Its a small potatoes investment for KO but its good to see them working to grow share.
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I love KO!! especially with that new green mountain deal.
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02-10-2014, 09:50 AM
(This post was last modified: 02-10-2014, 01:04 PM by hendi_alex.)
I'm considering adding Coke as my second member of the 'products add almost no benefit to society' list. Probably continues to be a great long term investment however.
Alex
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KO probably has quite an array of decent products. But their soft drinks both sweetened and sugar free are a bane against man kind. Most are both physically and psychologically addictive. They also contribute to the obesity epidemic as well as many other possible physical issues. As best I can tell, they have zero beneficial value. That is my main criteria thus far, as relates to ethics in investing. If the primary product is both harmful and has zero beneficial value, then I'll probably avoid it.
Your question did prompt me to glance and holdings for quick litmus test.
AAPL - useful devices
BTU - useful energy source
CCJ - useful energy source
CSCO - useful devices
CSG - useful properties
ECA - useful energy source
HCP - health care benefit
INTC - useful devices
MCY - insurance needs
NAT - delivery/transportation services
O - properties
OB - insurance needs
ORI - insurance needs
PBA - energy infrastructure
POT - fertilizers
RYN - forestry products
SPH - energy delivery
SSL - energy and chemicals benefit
T - communications
TGP - LNG transportation
So while there are some companies which have very nasty aspects to operation, their primary product/service provides a real, useful benefit. IMO that definitely can not be said about the soft drink companies. Their main line products are both harmful and are without any measure of benefit. I'm not advocating such a list for anyone else, but seems like a reasonable stance to me, given both evidence related to the products and my own personal feelings and observations concerning them. Certainly not in the same league with the death business, but still most of the soft drinks themselves are utterly without beneficial value.
Alex
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As a consumer I benefit by having something I really enjoy to drink on a hot day.
Obviously if I drank a 12 pack a week it wouldn't be good for my health, but I see nothing wrong with enjoying a coke or sprite every once in a while.
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02-10-2014, 01:20 PM
(This post was last modified: 02-10-2014, 01:26 PM by hendi_alex.)
To me it is all in the context of reasonable consumption. Recommended sugar consumption of added sugar products is max 6 tsp per day for a female and max of 9 tsp per day for a male. A single coke contains the approximate equivalent of 9 teaspoons of sugar. So just one coke breaks the bank for sugar intake of a female, with the same providing the maximum that a male should have. How many people will only get added sugar from than soft drink? So how much coke represents a reasonable serving size, based upon FDA and other dietary recommendations? My guess is that a 4-6 ounce portion would represent moderate intake, as that would only give about 3-4+ teaspoons of sugar.
Alex
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Ko sells Dasani, smart water, and vitamin water. I think bottled water is beneficial to society. Especially during times of crisis(hurricane, tornado, etc) when clean drinking water might not be readily available.
I always have trouble understanding the fascination with KO.
I understand that past results are no guarantee of future returns, but look at the past results. I use Morningstar for most of my data, and here is what Morningstar says about the 15 year annualized total return of KO, and of some of its consumer staples competitors.
KO: 2.85%
HRL: 12.01%
GIS: 7.67%
PEP: 6.66%
The reason KO has done so poorly over the long term is that it is almost invariably over priced. But that was then, what about now? Following are current yields and P/E ratios from Morningstar and 5 year normal P/E ratio from FAST Graphs:
KO: 2.88% 20.33 21.6
HRL: 1.84% 23.4 19.0
GIS: 3.05% 18.81 17.2
PEP: 2.91% 17.95 18.6
On these numbers alone, GIS and PEP are a better value than KO and a much better value than HRL.
What about dividend growth? 5 year dividend growth from Morningstar:
KO: 8.45%
HRL: 12.94%
GIS: 10.95%
PEP: 8.35%
If dividend growth is your primary criteria, then HRL is the best of this bunch. For my money, the winner is GIS, which has paid a dividend every year for the last 115 years, and has never reduced its dividend.
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BHN,
Nice comparisons and I do agree with you on General Mills. Sometime Coca-Cola is just so All American it's hard to resist.
