Is The Coca-Cola Company (KO)’s Growth Story Over?

The company will continue to have healthy level of growth but there won’t be much of aggressive growth for Coca Cola anytime soon unless the company launches some new products no one has heard of before. The company can possibly double its earnings in the next 10 years by increasing its presence in developing markets, which can also double the dividend payments. While this is decent growth, this may not be aggressive enough for many investors. I personally like a mix of fast growth (a growth rate of 20% and above annually) and medium growth (a growth rate of 5% to 20% annually) companies in my portfolio. If an investor will pick a medium growth company over a fast growth company, he or she should also pay attention to the dividend yields so that they can get compensated for the lack of aggressive growth. When it comes to dividends, Coca Cola is the king. The company grew its dividend payments by an average of 10% in the last 40 years. Not many companies can say they did this.

Coca Cola competes with many companies including PepsiCo, Inc. (NYSE:PEP) and Monster Beverage Corp (NASDAQ:MNST). Pepsi has a snacks division in addition to beverages and Monster mostly focuses on sports drinks such as energy drinks. In the last year or so, Pepsi has been working on a restructuring which is coming near completion. Monster might have some legal troubles, but the company continues to see strong growth all around the world. Last year, many people expected Coca Cola to buy Monster, which didn’t happen but I think it will eventually happen. Coca Cola needs the growth rate of Monster while Monster needs the brand name and distribution channels of Coca Cola.

Coca Cola is a medium level growth company with a decent dividend rate which keeps growing every year. The investors that are not necessarily looking for aggressive growth in every stock in their portfolio can gain from this stock. While there isn’t much upside for Coca Cola in the short term, the company will continue to be successful in the long term. In conclusion, Coca Cola’s growth story is not over, because the company still has a lot of products to launch in a lot of developing markets. The company is well on its way to achieve its 2020 goals.

The article Is Coca-Cola’s Growth Story Over? originally appeared on Fool.com and is written by Jacob Steinberg.

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