After much contemplation I decided today to increase my holding of Coke. I’ve read a lot of articles and analyst research and have convinced myself that it is one of the few bluechip companies that are trading at a fair price.
Barring a significant rise in price in the near term, I anticipate making several such KO purchases when my supply of capital allow. I am slowly converging on a list of core equities that I would like to build a large position in – KO, PM, XOM and NSRGY. In the event of a significant market correction I will be scrambling to buy as much of these as I can!
One major factor for me in focusing in on Coca-Cola was a recent WealthTrack interview with Don Yacktman, who is very bullish on KO. His funds have performed exceptionally well over the last 10 years, so his thoughts held a lot of weight with me.
With dividend reinvestment in place I’m hoping I will see a long term return in the neighborhood of 10 to 11 percent annually. 7% to 8% through earnings growth, plus the 3% from the reinvested dividend. With Cokes ability to sell a few cents of syrup for a dollar or so a serving, and the strength of their brand around the world, I consider their moat and their profitability to be a relatively safe bet.
My original position from earlier in 2013 was 64 shares. Since then dividend reinvestment has boosted my hold to 65+ shares. Taking advantage of todays price dip I purchased another 64 shares for $2510.08 at $39.24 a piece.
The Coca Cola holdings in my portfolio now total 129.112 shares with a new cost basis of $5082.54. The yield is floating somewhere between 2.8% and 2.9%, so my annual KO dividend has now increased to roughly $145.