Coca-Cola is one of the most recognized brands in the world. Even in places where nobody speaks English, they’ll know that the iconic red can is a “Coke.” But for investors, this is the brand of one of the largest drink companies on the planet. Coca-Cola owns more than 200 different brands, many with dozens of individual products under their own labels. The upshot is a durable, highly profitable company that tends to do well among pretty much all consumer groups. If that sounds like the kind of firm you’d invest in, you’re in luck. This is also a publicly traded firm. Here’s what you need to know before you invest.
A financial advisor can help you compare the risks and benefits of different investments for your financial plan.
How to Invest in Coca-Cola Stock
Coca-Cola trades under the stock symbol KO on the New York Stock Exchange (NYSE). This is a publicly traded company that sells shares of common stock. That means that there are no special restrictions on who can buy this stock, nor do you have special rights or restrictions as a shareholder.
To buy Coca-Cola (KO) stock, you would want to follow the same steps as purchasing any other share of publicly traded stock. Specifically:
Create a Brokerage Account
You also may already have an account through a 401(k) plan. If so, you can trade Coca-Cola stock through that portfolio.
Transfer Money to Your Brokerage Account
Once you’ve opened a trading account, you need to fund it. When it comes to funding an account, you want to use as much money as you feel comfortable investing. This is your portfolio cash, not your savings, so don’t use this as a bank account. Among other concerns, very few portfolios will hold your money in an FDIC-insured bank account.
Transfer in the amount of money that you feel comfortable investing in Coca-Cola and any other assets. Leave the rest in your savings for now.
Buying Stock: Issue a Buy Order for KO Stock
Choose the amount of KO stock that you want to buy and issue an order to do so, either directly, if you’re using a trading platform, or through your broker.
The amount of stock you buy should depend on your trading strategy. While Coca-Cola is bigger and more stable than most other companies, this is still an individual equity. Buying a stock is higher risk/higher reward than investing in something like a mutual fund or an ETF. You will collect all of the gains if the company does well, but you have no diversification to mitigate losses. Invest based on how much money you’re comfortable committing to a higher risk strategy.
Buying Funds: Issue a Buy Order for Funds That Hold KO Stock
On the other hand, you may want to own Coca-Cola without the exposure of holding individual stocks. In this case, you should seek out equity funds like ETFs or mutual funds that hold shares of KO stock.
These will generally be funds invested in the food and beverage industry, and possibly service/hospitality-oriented portfolios as well. Any S&P 500 portfolio will also hold shares of KO, as it’s included in that index, as will many large-cap funds.
By investing in funds that hold shares of Coca-Cola you can diversify your risk. You won’t have the full exposure that holding an individual stock does, although you also will dilute your potential gains if this stock does particularly well.
Should You Invest in Coca-Cola?
There are many factors to consider before investing in any individual stock, and Coca-Cola is no different. Factors you should look at include:
Coca Cola is a large capitalization stock that represents ownership in one of the largest companies in the world. The company is big enough that it’s included in the S&P 500, and you can buy shares both from other investors and from the Coca Cola company itself (direct purchase).
Over the past several year’s Coca Cola’s stock price has shown moderate short-term volatility, fluctuating by around 10% on a month-to-month basis. Over the long term this has been somewhat steady growth stock. After slowly climbing in the $40 – $50 range for most of the 2010’s, Coca Cola has shown faster recent growth. Overall, though, this stock’s history suggests a steady stock, but not a value asset.
The company has historically paid steady dividends. At time of writing the company issued quarterly dividends of $0.44 per share with an annual dividend yield of $2.99. These payments have increased steadily since 2012. In July, 2012 Coca Cola issued a stock split, cutting its dividends in half and giving existing shareholders new shares on a 2-1 basis.
Evaluating whether to buy Coca-Cola shares entails considering the performance of the overall food, service and hospitality sectors as well as the company’s core beverage industry. After all, when restaurants are doing well people buy a lot more Coke and Sprite.
Since 2020 the service industry has steadily recovered from its covid-induced losses. Coca-Cola itself, meanwhile, has remained steadily profitable. Sales and revenues continue to grow for the company, and given its global bottling operations it has not been harmed by the weak dollar. The company, which holds more than a 40% share of the non-alcoholic beverage market, has a wide range of brands that covers just about all areas of the beverage industry, ranging from sodas and bottled water to juice and coffee. It has even begun selling alcoholic beverages such as its Jack Daniels partnership. It more than 200 individual brands and labels around the world and it continues to grow, with recent acquisitions including Topo Chico and the energy drink BODYARMOR.
Shares of Coca-Cola may deserve a closer look if you seek a U.S. based company that reliably pays and steadily increases dividends. It may also appeal to investors searching for large-cap consumer staples holdings. Finally, these shares are often regarded as growth shares, so if you are a growth-oriented investor rather than a value investor this could be something you may want to add to your portfolio.
Coca-Cola is a publicly traded firm that issues shares of common stock. It pays dividends on a quarterly basis, and you can invest through any mainstream brokerage or trading platform.
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