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KO

Coca Cola to announce dividend increase

What's Happening

Soft drink maker Coca Cola ( KO ) will likely announce its next dividend increase this week. The stock currently offers a 3.6% yield, and the company has boosted its dividend for a lengthy 54 consecutive years. KO shares have fallen 1.4% on the year.

Technical Analysis

KO was recently trading at $41.20, down $5.93 from its 12-month high and $1.32 above its 12-month low. Overall technical indicators for KO are bearish with a strong downward trend. The stock has recent support above $40.20 and recent resistance below $42.25. Of the 13 analysts who cover the stock, two rate it a "strong buy", 10 rate it a "hold", and one rates it a "strong sell". The stock receives S&P Capital IQ's 4 STARS "Buy" ranking.

Analyst's Thoughts

Coca-Cola has been struggling with a consumer shift away from sugary soft drinks, and the stock has been trending lower over the last year. With the recent poor stock performance, it is very unlikely that this will be the year that Coca-Cola decides to break its lengthy streak of dividend increases. The stock has a fairly high payout ratio of 79.6%, so investors should not expect a huge increase this year. Last year the company boosted its dividend by 6%, and in the previous year it lifted its dividend by 8.2%. Expect a similar increase this year, with the quarterly distribution rising from $0.35 to around $0.375, for an increase of 7.1%. Look for the news this week, with the stock trading ex-dividend mid-March.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider a June 32/37 bull-put credit spread for a 25-cent credit. That's a potential 5.3% return (16.1% annualized*) and the stock would have to fall 9.6% to cause a problem.

Bearish Trade

There are no bearish trades we like on the stock at this time.

Covered Call Trade

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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