Shares of Coca-Cola will rise soon. Analysts believe that it is time to buy
Coca-Cola shares have always been considered a good solution for passive income. The world-famous producer of beverages provided dividend income to shareholders, which rose 57 years in a row. However, the company’s securities were rarely bought for resale, as they are showing slow growth, and it is simply unprofitable to play on value. Now the situation may change. Analysts at Deutsche Bank advised buying giant stocks.
Why can Coca-Colashares possibly grow
Representatives of Coca-Cola announced the redemption of their shares. In particular, the manufacturer of sugary drinks intends to buy and withdraw from the circulation of 150 million securities. In addition, the company has increased the size of dividends. In particular, for the first quarter of 2019, investors will receive 2.6% more than in the fourth quarter of 2018.
Coca-Cola has always been an attractive investment item if the investment goal was to receive dividends. The company has been increasing cash rewards for 57 consecutive years. The remuneration will be paid on April 1 to all those who purchased the securities of the manufacturer of sugary drinks before March 15, 2019. The total yield will be 3.6%.
But the main news for the experts of Deutsche Bank was the decision to increase the share repurchasing program. In particular, in 2019, Coca-Cola wants to return 150 million securities. This is no less important part of the strategy than the annual increase in dividends. 150 million shares 3.5% of the total number of issued securities of the company.
The former stock acquisition program expires this year. In accordance with its provisions, from 2012 (it was then that it was adopted), Coca-Cola was supposed to repurchase 500 million securities. In 2018, the company acquired 32 million shares, on average, for $ 44.5. In total, the manufacturer spent on the acquisition of its own securities 1.5 billion dollars. In 2017, Coca-Cola acquired 82 million shares, the average price of which was $ 44.
As practice shows, during the period when the company announces plans to acquire securities, as well as to increase dividends, a sharp jump in demand for stocks is recorded. It happened now. Immediately after the appearance of this information, the quotes of the manufacturer increased by 1%. Thus, the bearish trend, which continued throughout the winter, stopped. In the course of price reduction, the company’s securities lost 7% of the cost.
However, analysts at Deutsche Bank claim that a 1% increase is far from the limit. According to experts, the quotes of the manufacturer of carbonated drinks in the next 12 months will increase by 13.7%. Experts are also optimistic about operating profit indicators. In absolute terms, it will be about 10-11%. If you do not take into account the absorption of other companies, analysts expect profit growth of 8-9%.
Deutsche Bank experts recommend to hurry up with making a purchase decision. The first stage of rapid growth may begin soon.
