Coca-Cola (NYSE: KO) stock price has been expanding the bullish trend since the beginning of this year. It is among the defensive stock picks for retirees due to its extensive dividend growth history.
The year to date rally is supported by substantial growth in financial numbers – which enhances prospects for further growth in cash returns.
Coca-Cola stock price rallied 16% since the start of this year to an all-time high of $56. The shares are currently trading 32 times to earnings and 12 times book value compared to the industry average of 20 and 13 times, respectively.
Third Quarter Results Supports Coca-Cola Stock Price
The company has topped revenue and earnings estimate for the third quarter. Its net revenue increased by 8% from the past year period. The organic revenue growth was at 5% year over year in the third quarter.
The company claims its strategy of launching innovative products and improving revenue management added to third-quarter revenue growth. Moreover, it has also converted strong revenue growth into big profits. Its earnings per share increased 37% year over year to $0.60.
“Our performance gives us confidence that our strategies are taking hold with our consumers, customers, and system,” said James Quincey, chairman, and CEO of The Coca-Cola Company.
The company has increased its outlook for the full year following a robust growth in the third quarter. It anticipated almost 5% organic revenue growth and 12% comparable currency neutral net revenues growth for the full year,
Cash Returns are Safe
Coca-Cola has a long history of returning significant cash to investors in the form of dividends and share buybacks. The company has raised quarterly dividends in the past 57 consecutive years.
It currently offers a quarterly dividend of $0.40, yielding around 3%. Its dividends are safe considering the cash generation potential. Its operating cash flow grew by 37% year over year to $7.8 billion in the past nine months. Overall, the Coca-Cola stock price is likely to receive support from improving financial numbers and cash returns.