How Coca-Cola's (KO) Dividend Can Satisfy Long-Term Investors - TheStreet

Shares of Coca-Cola (KO) - Get Report , the world's largest carbonated beverage company, will trade ex-dividend Friday. That means if you want to get a dividend check you have to own Coke stock before then. On that Friday the company will finalize its roster of shareholders to whom it will send dividend checks.

Why would you want to own Coke when soda sales have slumped and its shares, at $43, are down nearly 3% over the past 52 weeks? Its solid 33-cent quarterly dividend that yields about 3.12% annually -- 1.12 percentage points higher than the average yield paid out by stock in the S&P 500I:GSPC index.

Once you get the dividend, however, it's up to you to decide whether you want to check out of the stock or not.

Shares of the Atlanta-based company are up nearly 2% for the year to date compared with the Dow Jones Industrial Average (DJI)  being flat and the S&P up 1% for the period. More significant, rival PepsiCo (PEP) - Get Report  is up 6% thanks to its ever-popular snack food unit.

Coke will pay its 33-cent quarterly payout on Dec. 15 to shareholders of record as of Dec. 1. The company's revenue and profits have been under pressure due to -- among other things -- concerns about artificial sweeteners and rising obesity rates worldwide. Still, Coke has beaten Wall Street's earnings per share estimates in four straight quarters while looking for ways to create long-term value for its shareholders.

The September launch of the National Product Supply System (NPSS) was one recent example. The NPSS, which is expected to be completed by 2018, is designed to streamline and optimize Coca-Cola's bottling operation in the U.S. and help the company reduce manufacturing and delivery costs. To the extent NPSS can help Coca-Cola achieve higher profit margins by eliminating waste, the stock will respond favorably.

It seems analysts expect significant improvements in the next 12 months. The stock has a consensus buy rating and the average analyst 12-month price target of $46 suggests some 10% gains from the stock's current level. If Coke stock bubbles up to the high target of $53, it would have delivered gains of more than 25% -- making Coke a bargain.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.