Want $1,000 in Dividend Income? Here's How Much You Have to Invest in Coca-Cola Stock
Investing in dividend-paying stocks can prove rewarding over time. It’s a good way to receive regular income — assuming the company has the means to continue making payouts, of course.
Coca-Cola (NYSE: KO), with a stable of popular beverages like soda, water, juice, and plant-based drinks, has a long history of not only paying dividends but raising them. Earlier this year, the board of directors raised dividends by 5.4%, marking 62 straight years with an increase. That makes the stock a Dividend King, part of an illustrious group of companies that have increased payouts for at least 50 consecutive years.
How much money would you have to invest if you want to receive $1,000 in annual dividends?
Image source: Getty Images.
Investment calculation
Coca-Cola currently pays a $0.485 quarterly dividend. That works out to an annual dividend of $1.94 a share. To receive $1,000 in dividends, you’ll have to purchase 516 shares.
How much will those 516 shares cost? At the current $70.75 per share, you’ll have to invest about $36,500. Notably, these calculations take a cautious approach by assuming dividends remain constant.
You shouldn’t have to worry about the company cutting dividends, either. Investors can take comfort in knowing that Coca-Cola’s free cash flow (FCF) easily covers dividends. During the first half of the year, it generated an FCF of $3.3 billion and paid out $2.2 billion in dividends.
Coca-Cola’s stock has a 2.7% dividend yield, more than double the S&P 500‘s 1.3%. With the company’s strong commitment to dividends, high yield compared to the market, and free cash generation that supports payments, dividend-seeking investors should find these shares attractive.
Should you invest $1,000 in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $715,640!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 16, 2024
Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.