AFLAC Incorporated (AFL), Philip Morris International Inc. (PM), The Coca-Cola Company (KO): A Strong Dollar Shouldn’t Scare You Away From These Stocks

You can enjoy this company, even if it’s not enjoying the dollar

The Coca-Cola Company (NYSE:KO) is an American beverage company, most famous for its name brand The Coca-Cola Company (NYSE:KO). It produces and sells its beverages across the globe. Let’s again refer to the dollar index illustration from earlier:

Source: CNBC

While Coke is at home in the United States, it generates most if its revenue overseas due to the massive global market it serves. The stronger dollar has resulted in unfavorable exchange rates. It has also resulted in its products being more expensive to the foreign consumer.

When Coke announced its earnings for the second quarter, management stated that the dollar took a chunk out of the bottom line. Coke took a 2% hit on net income, and 3% hit on operating income due to currency issues.

While The Coca-Cola Company (NYSE:KO)’s quarter wasn’t spectacular, you still can have faith in this Warren Buffett favorite. It’s 5-year sales growth rate is still 10.72%, and its dividend 5-year growth rate is 8.45%. It has maintained a high return on equity at 26.68%.

Moving forward, Coke will weather the strong dollar, and unfavorable economic environment overseas. Even with the lack luster quarter, its global sales were up 1%. Coke has an iconic brand, industry leading distribution and will continue to prosper over the long term. I would take advantage of any hit from these temporary set backs, as The Coca-Cola Company (NYSE:KO) rarely goes “on sale.”

The bottom line

These three companies are all strong dividend growth stocks. The strong dollar has hit them a little harder than most companies. However, remember that currency headwinds don’t reflect poor health of a company’s business model. If the business is healthy, you can feel safe investing for the long term.

The article A Strong Dollar Shouldn’t Scare You Away From These Stocks originally appeared on Fool.com and is written by Justin Pope.

Justin Pope owns shares of Philip Morris International. The Motley Fool recommends Aflac and Coca-Cola. The Motley Fool owns shares of Philip Morris International. Justin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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