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Will Growth Initiatives Pay Off At Coke?

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G iveCoca-Cola ( KO ) credit. It's not standing pat amid flagging soda demand in North America. The Dow component has been taking steps to shore up its balance sheet in recent years and hasn't been shy about making strategic investments to rejuvenate growth.

Last week, Coke announced plans to sell nine of its production plants to three of its biggest production partners for around $380 million. Nine manufacturing facilities will be transferred to bottlers between 2016 and 2018.

Coca-Cola continues to see a decline in soda sales in North America as consumers shift away from sugary drinks, but its global still (noncarbonated) beverage business is doing well. In the second quarter, volume grew 5% as ready-to-drink tea rose 7% and packaged water rose 8%.

Coke also has high hopes for a couple of recent strategic investments.

In June, Coke closed on its partnership deal withMonster Beverage ( MNST ), where it acquired a 16.7% equity stake in the energy-drink maker for just over $2 billion. Under the pact, Coke transferred ownership of its energy-drink business to Monster. In return, Monster transferred its non-energy-drink business to Coke.

Earlier this month, a report on August beverage sales by Wells Fargo showed that Monster's dollar sales rose a solid 11.2% from a year earlier during the four-week period ending Sept. 5. Unit sales rose 12.6%.

Coke also owns a 16% stake inKeurig Green Mountain ( GMCR ), although growth prospects at Keurig are hazy at best. The investment calls for Keurig to make Coke-branded single-serve pods for its Keurig Kold at-home cold beverage system.

Coke goes ex-dividend Thursday. That's when it's scheduled to pay a dividend of 33 cents a share. Coke has a dividend growth rate of 9% and an annual yield of 3.3%.

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


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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