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Coke's Stock Opens Happiness for Investors

Stocks in this article: KO

With the crumbling economy forcing companies to cut dividends, Coca-Cola (KO - Get Report) last week announced a 7.9% boost to its quarterly payout, the 47th consecutive annual increase.

Before Coke's hike in its dividend to 41 cents a share, the globally diversified firm said fourth-quarter revenue fell slightly because the dollar rebounded. Still, earnings per share rose 10% to 64 cents from a year earlier. Analysts forecast earnings to climb 24.5% to $3.10 a share this year and gain an additional 9% to $3.38 a share in 2010.

Investors are more favorable to Coke than they have been. The company's stock has fallen only 5.5% this year, making it the Dow's second-best performer. In the past year, the shares have declined 25.1%, earning a ranking of No. 10. Ratings' quantitative model, which examines a company's valuation metrics, financial situation and analysts' consensus expectations of future growth, awards Coke a B-minus, which equates with a "buy" recommendation.

With a dividend yield topping 3.5% and priced at a modest 13.8, Coke's reward grade from Ratings is a B-plus. Its $9.3 billion in debt and price of nearly five times book value hold the firm's risk grade to a C-minus.

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