Trading212 Portfolio- 01/09/20

Weeks summary


Stock picked: Coca-Cola

Ticker: KO

Shares added: 0.125

Total shares owned: 0.349

Dividend yield: 3.31%

Payout ratio: 76%


Dividends received: £0.30

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This weeks stock

What does Coca-Cola ticker KO do?


Coca-Cola is a beverage company which markets, manufactures and sells nonalcoholic beverages world wide. The company manufactures sparkling soft drinks, water, enhanced water (sports drinks), juice, dairy & plant based beverages, tea & coffee and energy drinks.


You will recognise many of these brands which vary from Coca-Cola as we all know and love to other such as Schweppes, Fanta, Innocent, Smart water and many many more.


KO operated through a network of Company-owned or bottling and distribution operators as well through independent bottling partners, distributors, wholesalers and retailers. Coca Cola owns or licences and markets over 500 non-alcoholic beverage brands over Europe, Middle East and Africa, Latin America, North America and Asia Pacific.


Fundimentals:

Dividend Yield: 3.31%

Payout ratio: 76.42%

Profit margin: 26.77%

Return on assets: 6.59%

Return on equity: 46.64%

P/E ratio (price to earnings): 22.75

Adjusted EPS: $0.209

EPS (Earning per share) Growth: 38%

BETA: .55

Cash: $19.83B

Debt: $52.35B

EBITDA: 11.25B

Stock breakdown:


From a US stock 3.31% is a fairly healthy yield and within the range I like to see (between 1-5% dividend), but this comes with a larger payout ratio of 76%. I would really like to have seen this payout ratio bellow 60% as they are now paying out most their profits as a dividend.


They seem to have a very healthy profit margin of 26%, this is much above the 10% I normally like to see so they are making good margin on their products.

Moving onto the P/E ratio its currently 22.75, this indicates to me its just over fair value as the average for the nonalcoholic beverage industry is around 23.17. [1]


Looking at KOs’ EPS growth we can see a very nice 38%. [2]

Seeing growth is always a good sign for a company but due to covid, sales have been hit hard and has caused some uncertainty like with many other businesses. As a result KO has started cutting thousands of jobs with the company offering voluntary redundancies to 4000 workers in the US, Canada & Puerto Rico. [3] While redundancy and job losses are never nice, from an investor stand point hopefully this will give KO the opportunity to streamline.

Having a look at the BETA of Coca-Cola its currently at 0.55 which indicates its a fairly stable stock in terms of stock price compared to the general stock market.


It seems Coca-Cola has a fair bit of debt on hand currently, but they also have a fair bit of cash. With the cash flow of KO it seems they can handle their debt but in my eyes I still would like to see a lower amount of debt. Click here for a good article on the debt. [4]

Coca-Cola does offer a very nice dividend but strings attached with the high payout ratio and their high but serviceable debt. Comparing it with PepsiCo’s diversity into the snack and drink PEP offers a good comparison.


Click here to read the blog about PEP. [5]

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Dividends received

This week we received 2 dividend this week totalling £0.30.

NG @ £0.23

WELL @ £0.07


Total dividend (6 month): £2.98


Amount for charity (6 month): £0.75


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General account summary


Since Trading212 has started its Beta of the pie function I have no moved all the stocks into a pie and called it SF50 (Smart finance 50 stocks). The max limit of stocks you are able to have inside a pie is 50 so this worked out perfectly for us.

Being inside a pie any dividend deposited into the account will trigger an automatic buy across all investments once the minimum amount has been hit. This will hopefully make it easier to compound these stocks when the dividend payments get larger.

What to know how investing into Index trackers and adjusting your habits could help you build wealth? Click here


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What is:

P/E ratio EPS Payout ratio BETA Dividend


Here is a list of great books to read - click here

Trading212 referral


Average nonalcoholic industry P/E ratio [1]

https://csimarket.com/Industry/industry_valuation_ttm.php?pe&ind=502


KO EPS growth [2]

https://www.macrotrends.net/stocks/charts/KO/coca-cola/eps-earnings-per-share-diluted


KO job cuts & voluntary redundancies [3]

https://www.reuters.com/article/us-coca-cola-layoffs/coca-cola-to-cut-thousands-of-jobs-as-coronavirus-hits-sales-idUSKBN25O1KT


KO Debt [4]

https://uk.finance.yahoo.com/news/coca-cola-nyse-ko-using-153615633.html


Smart finance PepsiCo blog [5]

https://www.smartfinancepage.co.uk/post/trading212-portfolio-26-05-20



 

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