Coca-Cola (KO), based in Atlanta, is a leading producer of soda, juices and juice drinks, and ready-to-drink teas and coffees. Sales in 2019 were $37 billion, notes Chris Graja, CFA, of Argus Research.

The company distributes its products in more than 200 countries. Core brands include Coca-Cola, Diet Coke, Sprite, Fanta, Coca-Cola Zero, Vitaminwater, PowerAde, and Minute Maid.

Management has recognized that it needs to diversify revenue away from sugary soda and we expect it to make progress toward this goal.

The company eliminated more than 600 “zombie,” or unproductive, products in 2019 and worked to reposition the business through changes in core products, pack sizes and serving sizes, as well as through deals like the recent acquisition of coffee company Costa.

The company’s innovation has also improved and we expect additional progress in making the portfolio of brands less bloated and more profitable.

To be sure, even high quality consumer companies are not immune to disruption from COVID-19. Coke has seen a significant decline in sales of beverages through restaurants, amusement parks, sporting events and schools.

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Volumes at grocery stores have risen, but not enough to make up the difference with so many “away-from-home” locations closed or operating with limited take-out service.

We expect Coke to be a stronger company when the pandemic fades. We expect the combination of more focused marketing and a more profitable brand portfolio to boost earnings and the share price as the away-from-home business rebounds.

KO has now increased its dividend for 58 consecutive years with a quarterly dividend increase to $0.41. Dividend payments totaled $1.56 per share in 2018. In February of 2019, KO raised its quarterly payout by 2.6% to $0.40 per share.

Dividends totaled $1.60 in 2019 and $1.64 in 2020. The dividend yield is about 3.15%. We are maintaining our "buy" rating on Coca-Cola Co. with a price target of $58 per share.

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