Some pretty good news from one of our favorite dividend champions today. The Coca Cola Company (KO) announced that they would be investing in a 16.7% equity stake in Monster Beverage Company (MNST). As a part of this deal, KO will be exchanging their energy drink portfolio (NOS, Full Throttle, etc) for Monster’s non energy drink portfolio. This will help better align each companies product portfolios and benefit from brand marketing. Plus, each companies management will be working on growing products they are most familiar with.
This bodes extremely well for KO. As we all know, KO is a dividend champion, but has had waning revenue for the past few quarters due to the unhealthy reputation being associated with carbonated beverages. Even though KO has been able to push forward the their diet and stevia lines, there needs to be new and diversified products to help offset loss in Coke sales and continue to grow revenue globally. The stake in MNST should help them do just that.
I personally bought 40 shares of KO at the end of 2013 when it was hovering around $37. It’s at the high end in regards to PE, but KO is an awesome dividend stock to have in your dividend portfolio. With a solid yield, economies of scale and a very wide moat, KO is sure to weather the storm and find continued ways to expand their product line, grow revenue and provide value for their share holders. Check out more in the video!