We recently read with great interest a recent Coca-Cola (NYSE:KO) themed piece by our colleague Dividend Investors, entitled “Coca-Cola: The Dividend Is At Risk.” While the piece touched upon some sales pressure and concerns over earnings per share, the strongest insight stemmed from a technical chart suggesting the stock was ahead of itself.
We actually agree with that assessment, but would like to offer our own insights diving deeper into the material, specifically as it relates to a dividend “at risk.”
Let us be clear, we have called for buys as the stock approaches a 4% yield in the past (a rare occurrence).With the drop in shares, the risk-reward profile changes and the downside protection/upside potential from the higher yield becomes a stronger motivator to own this Dividend Aristocrat.
At current price levels, the risk is now high for a pullback for the reasons our colleague discussed in the aforementioned piece. In the present column, we are of the strong opinion that the dividend itself really is at risk, though for reasons you may not have seen drawn out elsewhere………..READ MORE