The author holds Coca-Cola as nearly 5% of their portfolio, their fourth-largest position, and says they have no plan to sell. Coca-Cola has raised its dividend for 64 consecutive years, qualifying it as a Dividend King, with a forward yield of 2.3% versus 4.9% on the 10-year Treasury and a trailing payout ratio of 62%. Its capital-light model, which sells concentrates and syrups to bottling partners, helped it spend 79% of free cash flow on dividends over the past 12 months, while rival PepsiCo operates at lower margins by bottling its own drinks. Over the past 30 years, Coca-Cola's total return including reinvested dividends was 720%, below the S&P 500's 1,750%, though the author believes returns should smooth out over the coming decades.
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