The board of directors of The Coca-Cola Company (KO - Analyst Report) recently announced a 9% increase in its quarterly dividend marking the 52nd consecutive quarterly dividend rate hike.
The quarterly dividend was increased from 28 cents to 30.5 cents per common share, equivalent to an annual dividend of $1.22 per share for fiscal 2014, up from $1.12 per share for fiscal 2013. The new dividend will yield 3.3% annually.
The first increased quarterly dividend will be paid on Apr 1, 2014 to shareholders of record as on Mar 14, 2014.
The cola giant’s solid cash position allows it to regularly return value to shareholders through dividends and buybacks. In 2013, the company paid dividends worth $5.0 billion and bought back shares worth $4.8 billion, higher than an expected range of $3.0–$3.5 billion.
The dividend increase came on the heels of a dull quarterly result reported earlier this week. Coca-Cola missed the Zacks Consensus Estimate for revenues and only managed to meet the earnings expectation as the U.S. beverage sales slowed down. Changing consumer preferences, increasing health consciousness, rising obesity concerns and growing regulatory pressures are affecting the sales of Coca-Cola’s sparkling beverages likeCoke, Fanta and Sprite in America. Last week, PepsiCo, Inc. (PEP - Analyst Report) and Dr Pepper Snapple Group, Inc. (DPS - Analyst Report) , also announced a dip in their American carbonated soft drink volumes.
Coca-Cola is trying to revive the beverage business through increased marketing investments and package and product innovation. Another step in the direction is its latest deal with Green Mountain Coffee Roasters, Inc. . Under the deal, Green Mountain will exclusively make Coca-Cola branded pods for use on the upcoming Keurig Cold at-home beverage system that will make cold beverages. The partnership deal will allow Coca-Cola to tap the fast-growing cold beverage market and give it the much-needed diversification from its traditional soft drinks.
Coca-Cola carries a Zacks Rank #4 (Sell).