Is Coca Cola’s Dividend Enough To Justify Its Valuation?

Coca Cola (NYSE:KO) has grown its dividend for 52 years, but is it worth the price for investors? Many investors love Coca Cola for its 3% plus dividend yield. However, a high PE multiple leaves too much to earnings driven stock return. While you’re assured a healthy dividend with Coca Cola, at such a high PE, you’re betting too much on earnings growth, which in fact isn’t happening. As a matter of fact, the case is quite the reverse at the moment, with earnings decelerating year on year.

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Keeping these factors in mind, Coca Cola’s PE is too high to appeal to someone like me, who has a short to intermediate horizon. However, an investment in Coca Cola could work  well for investors who have a really long term investment horizon.