The Walt Disney Company (DIS) vs. The Coca-Cola Company (KO): Which Dow (.DJI) Stock’s Dividend Dominates?

Round three: power
It’s not that hard to commit to paying back shareholders, but are these payments enticing, or merely token? Let’s take a look at how both companies have maintained their dividend yields over time as their businesses and share prices grow:

DIS Dividend Yield data by YCharts.

Round four: strength
A stock’s yield can stay high without much effort if its share price doesn’t budge, so let’s take a look at the growth in payouts over the past five years. If you bought in several years ago and the company has grown its payout substantially, your real yield is likely much better than what’s shown above. Unfortunately, Disney’s annual payouts mess up its charting against Coke, so we have to plot them separately:

DIS Dividend data by YCharts.

KO Dividend data by YCharts.

Round five: flexibility
A company — even one as well-positioned as Disney or Coke — needs to manage its cash wisely to ensure that there’s enough available for tough times. When a company pays out too much of its free cash flow in dividends, it could be a warning sign that the dividend is at risk, particularly if business weakens. This next metric shows just how much of their free cash flows our two companies have paid out in dividends over the past four quarters:

DIS Cash Div. Payout Ratio TTM data by YCharts.

It wasn’t even close this time. Coke takes the crown with a dominant display of dividend durability. Does that make it the best investment today? Perhaps not; shareholders have earned only half the return Disney shareholders have enjoyed in the past five years. What do you think? Is Coke the better investment today, or does Disney offer some non-dividend advantages that make it a superior overall stock for your portfolio?

The article Disney vs. Coca-Cola: Which Dow Stock’s Dividend Dominates? originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool recommends Coca-Cola and Walt Disney (NYSE:DIS). The Motley Fool owns shares of Walt Disney.

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