Drink Up Beverage Stocks for the Long...
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John Murphy
Drink Up Beverage Stocks for the Long Term
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Both Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) are down today due to disappointing earnings from Coca-Cola.  This is what is known as an opportunity to buy at a discount.  Long term investors should accumulate positions in PepsiCo and Coca-Cola due to potential long term total returns each offers.

Interestingly enough, both Coca-Cola and PepsiCo are up for the last quarter, six months,  and year of market action.

For 2014, PepsiCo has risen by 9.98 percent.  Over the same period, Coca-Cola has jumped by 4.23 percent.  Each had a very strong performance over the last year of market action: Coca-Cola was up by 6.29 percent and PepsiCo shares gained just over 7 percent (chart below).  Both have solid growth ahead due to opportunities in global markets in China, India, and other countries.

The dividend yield of each adds even more to the long term appeal of Coca-Cola and PepsiCo.

Both are Dividend Aristocrats.  Those are stocks that have increased the dividend amount annually for at least the past 25 years.  At present, the dividend yield for PepsiCo is 2.91 percent.  For Coca-Cola, the dividend yield is 2.88%.  Those are far above the average dividend yield of around 1.8 percent for a member of the Standard & Poor’s 500 Index (NYSE: SPY).  With the history of each in increasing the dividend, shareholders can look forward to more raises ahead.

That obviously adds to the total return of a stock as dividends account for more than 40 percent of the long term return for an equity according to John Bogle, founder of the Vanguard family of mutual funds.

That puts Coca-Cola and PepsiCo right around double digits for the last year.  That is what the Wall Street analyst community is looking for in the future.  It should also be what individual investors are looking for in the long term too from these two Dividend Aristocrats!


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