Understanding Dividends using real-time examples

Coke Dividend payout study

Real time example of Dividends paid by Coca-Cola

Dividends are a way for companies to distribute a portion of their earnings back to shareholders, and Coca-Cola is a good example of how this works in practice. Coca-Cola pays dividends on a quarterly basis.

As of the latest information for 2024, Coca-Cola's dividend per share is $0.485, which reflects a steady growth over the years due to the company's strong financial health and commitment to returning value to shareholders. The company has increased its dividend annually for the last 63 years, demonstrating its reliability as a dividend-paying stock. This consistency can be attractive to investors looking for steady income from their investments.

The dividend yield, which measures how much a company pays out in dividends each year relative to its stock price, is currently about 3.03% for Coca-Cola. This yield is a crucial factor for investors as it provides insight into the potential return on investment from dividend payments alone, without considering stock price changes.

Coca-Cola's dividend payout ratio, which is the percentage of earnings paid to shareholders in dividends, is quite significant. It varies between 64% and 78% depending on the estimates and metrics used. This ratio is an essential indicator of how much of its net income Coca-Cola is giving back to shareholders, and whether such payments are sustainable with its current earnings​

Pepsi dividend payout study

PepsiCo is another prominent example of how companies use dividends to distribute profits back to their shareholders. As of 2024, PepsiCo pays dividends on a quarterly basis, with a recent dividend amount of $1.355 per share, reflecting an increase from the previous dividend of $1.265 per share. The company has a consistent track record of increasing dividends, having done so for the past 53 consecutive years, showcasing its commitment to providing regular income to its shareholders.

The current dividend yield for PepsiCo stands at around 3.12%, which is the ratio of the annual dividends per share to the price per share. This yield is a key indicator for investors, suggesting a reliable stream of income relative to the stock's market price. PepsiCo's forward dividend yield and recent dividend payments highlight its financial stability and the ability to maintain steady payouts to its investors.

PepsiCo's dividend payout ratio, which is a measure of the total amount of dividends paid out relative to the net income of the company, has been reported in various sources to be between 57% to 61% based on estimates for the coming year. This suggests that a significant portion of the company’s earnings are being returned to shareholders, but still leaves enough room for future investment and growth within the company​