I have been a long-time owner of Coca Cola stock. I buy a few shares (or fractions of shares) through their DRIP program, automatically reinvest the dividends to purchase additional shares (or fractions of shares), and will leave a nice little gift for the little Duper when I pass on. This past Summer, Coke indicated that they would do a two-for-one split, bringing the per-share price back down under $40, making it "feel" better when I make my random purchases (generally in $50 increments). Something psychologically better in buying a full share, versus a fractional one.
Anyway, Coke announces today that they will repurchase up to 500 million shares, helping the shareholders receive even more bang for their buck in the coming months.
They've doubled my share amount, and will now remove half a billion shares from the Market, a move that will certainly drive share prices up. As I said in the title of this post, win-win.
The cost of buying back those shares? Just under $19 billion, at yesterday's close. Incredible that Coke was that flush with cash. How do they compare to Pepsi? Good question:
Coca-Cola has risen 48 percent since Chief Executive OfficerMuhtar Kent took over in July 2008, compared with an 9.9 percent gain for rival PepsiCo Inc. (PEP) Kent has pledged to reach $200 billion in revenue for the company and its bottlers globally by 2020, double the sales generated in 2010.
“This company is in a good spot -- they don’t know what to do with all their cash except to give it back to shareholders,” Jack Russo, an analyst with Edward Jones & Co. in St. Louis, said in a telephone interview. “They’ve been active share repuchasers for a long time.”
Coca-Cola rose 0.3 percent to $37.84 at the close in New York. The shares have gained 8.2 percent this year.
Directors also declared a quarterly dividend of 25.5 cents, payable Dec. 17 to shareholders of record as of Nov. 30. The company completed a 2-for-1 share split in August.
So for all you Coke drinkers out there, please continue to drink up! My bottom line thanks you.
