Here’s How Many Shares of Coca-Cola You’d Need for $30,000 in Yearly Dividends. (Spoiler: It’s a Lot.)
As I’ve matured as an investor, I’ve largely switched from drooling over high-flying growth stocks to drooling over dividend payers. That’s because I’m appreciating more and more the value of getting regular income directly into my financial accounts without doing anything — and especially without having to sell any shares.
An example of a wonderful dividend-paying stock is Coca-Cola (KO +0.23%). Even Warren Buffett has held it in Berkshire Hathaway‘s portfolio for decades. (Coca-Cola was recently Berkshire’s third-largest stock holding, worth $30 billion. Indeed, Berkshire owns 9% of Coca-Cola.)
Image source: Getty Images.
So — why Coca-Cola? Well, for starters, for its dividend — which recently yielded 2.4%. If you were looking to generate, say, $30,000 in yearly dividends from it, you’d divide that $30,000 by the recent annual dividend amount of $2.12. That would show that you’d need 14,151 shares — which, at the recent stock price of $87 per share, would cost you about $1.2 million.
Today’s Change
(0.23%) $0.20
Current Price
$87.05
Key Data Points
Market Cap
Day’s Range
$86.19 – $87.17
52wk Range
$65.35 – $90.92
Volume
11.2M
Avg Vol
17.8M
Gross Margin
61.95%
Dividend Yield
2.39%
Most of us don’t have $1.2 million ready to invest, though, and if we did, we shouldn’t spend it all on one stock. But that exercise does show what you might get with a $1.2 million portfolio that sports an overall dividend yield of 2.4%. You can find fatter dividends, too, and you might alternatively just opt for a simple high-quality dividend-focused exchange-traded fund (ETF).
Remember that the best dividend payers increase their payouts regularly — and Coca-Cola has upped its payout for 64 years in a row. (The increases have been relatively modest, though.)
Coca-Cola is also attractive because it’s much less volatile than the market, and during a market downturn it’s likely to fall less than other stocks. And even in a recession, people won’t stop buying beverages.
If you’re itching to buy shares of Coca-Cola now, perhaps hold off — because the shares seem a bit overvalued at recent levels, judging by Coca-Cola’s recent forward-looking price-to-earnings (P/E) ratio of 26, which tops its five-year average of 23.
