Friday, February 20, 2009

Coca Cola raises dividend, shift brands, and remains strong through tough times.

Coca Cola (KO) raised their dividend this week from thirty eight cents to forty one cents each quarter. The most recent dividend will be paid April first to shareholders as record of March 15. Coca Cola has raised dividends thirty seven consecutive years. This shows the strength of the brand and company as many recent companies have cut or eliminated thier dividend payments to focus on restructuring and raising additional capital.

In related Coca Cola news, Pepsi announed a deal to distribute Rockstar energy drinks. This brand was previously distributed by Coca Cola. The details are sketchy and just announced at this point. I read into this as Coke's decision to let one brand go (Rockstar which most recently lost market share) and bring in one (Monster which is gaining market share). The company recently announced a deal to distribute Hansen Naturals Monster energy drink. The drink is number two in the world behind Red Bull (Privately held). Monster is not even available in some European markets and will be distributed by Coca Cola in those new countries. Letting Rockstar go as I'm assuming is what happened with the new Pepsi deal furthers my belief that Coca Cola will buy Hansen Natural within the next three years. Their exclusive agreement was signed as a long term deal but I think really is just a preview to see what they will be buying.

Vitamin Water continues to sell well as consumers shift from carbonated drinks to helathier options. The company has great athletes promoting this brand. The company has room to expand with new flavors and new sizes of the drink.

I recommend buying shares of Coca Cola below $45 with a target of $60 by 03/01/10
Also recommend buying shares of Hansen (HANS) below $35 with a long term target of $50 (by a buyout of Coca Cola)

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