Coca-Cola(NYSE: KO) investors have a few ways they can get bubbly returns from owning the beverage giant's stock. There's regular price appreciation, of course, which has been lacking lately as shares have declined in the past full year.
But owning Coke also gives you access to its gushing flow of dividend payments as well. The company has paid (and raised) its dividend in each of the last 62 consecutive years, earning it a spot in the exclusive club of Dividend Kings.
But just how much dividend cash are we talking about? Let's take a closer look.
The capital return plans
Coca-Cola funds its dividend through cash flow, which is ample for this business. The company generated roughly $10 billion of free cash flow in each of the last two fiscal years, for example.
Almost of all that excess cash is heading toward dividend payments. Coke paid $8 billion in 2023, the last full fiscal year. Management raised that payout by 5% in mid-February, meaning investors can expect roughly $8.4 billion of dividend payments in fiscal 2024.
That number isn't exact, however, because Coke also directs some capital each year toward stock repurchase spending. For every share that it buys back, Coke lowers its required dividend payout because the dividend is paid on a per share basis. Still, dividend payments will likely be just above $8 billion this year due to the modest financial impact of stock buybacks.
The next raise
Coke's annual payout raise for next year will depend on a few key factors, including sales growth, profitability, and cash flow. Given its long track record, it is extremely likely that investors will see another increase in early 2025. Yet, the scale of that hike is still unclear. Stay tuned.
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Demitri Kalogeropoulos 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.
