This FTSE 100 dividend stock’s flatlined in 2019! I’d spend £5k on my ISA and buy it today

Could this FTSE 100 laggard rip higher in 2020? Royston Wild explains why the answer could be yes.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Coca-Cola HBC (LSE: CCH) has performed better than many other FTSE 100 shares in 2019, but its performance isn’t one to be lauded. Its share price is basically flat from levels seen at the start of January. Nevertheless, I’d happily but it today ahead of what threatens to be another turbulent time for the global economy and one which could supercharge demand for defensive shares like this.

As we all know, Coke is one of those much-loved drinks labels whose cans and bottles fly off the shelves whatever the geopolitical and macroeconomic climate. Prices can rise and yet most drinkers won’t bat an eyelid. It’s why City analysts expect earnings to have risen 18% in this outgoing year despite a combination of softer overall consumer spend and bad weather, and for it to follow this up with a 12% rise in 2020.

The power of the Coca-Cola brand was illustrated perfectly by Kantar Worldpanel’s Brandz ranking report over the summer. This showed that the ubiquitous drinks label was the 14th most valuable brand in the world, worth an estimated $80.8bn, making it the highest fast-moving consumer goods (or FCMG) brand on the list.

Should you invest £1,000 in Coca-Cola HBC right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Coca-Cola HBC made the list?

See the 6 stocks

Full of fizz

Those thinking that these estimates are a bit giddy might want to look at the Footsie firm’s latest financials for validation of these numbers. In November’s third-quarter update Coca-Cola said that, despite adverse weather conditions in several of its markets, that volumes still rose 1.1% in the period. Thus at constant currencies revenues in the three months to September improved 3.4% year on year.

The drinks giant continues to grab share from its rivals, ensuring that even in tough trading conditions the top line can be relied upon to keep swelling. And thanks to ongoing innovation, examples which include expansion in the no-sugar market through its ‘Zero’ range of beverages, entering the energy drink market, and bulking up its presence in the mixers category, Coca-Cola is latching onto changing consumer trends to also help sales to move in the right direction.

On the up

The sort of revenues and thus earnings resilience that Coca-Cola provides is critical for any stock looking to raise dividends each and every year. And in recent times the FTSE 100 firm has indeed rewarded investors with some solid payout hikes (up 51.4% over the past half a decade).

It’s no surprise that some more mighty rises appear to be in the offing over the next year, too. Last year’s reward of 56 euro cents per share is predicted by City analysts to rise to 64 cents in 2019 and again to 71 cents in 2020. Investors can get hold of better near-term yields than Coca-Cola’s subsequent ones of 2.2% and 2.4%, though not all have the sort of defensive qualities to help dividends to continue rising over the next decade and beyond. I’d happily snap up the Coke bottler today, a share fully worthy of a premium price-to-earnings ratio of 18.3 times.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 New Year resolutions for ISA investors to consider!

Looking to put the fizz back into ISA investing? These top tips could help turbocharge the returns UK investors make…

Read more »

Close-up of British bank notes
Investing Articles

Fancy supercharging your passive income? Here are 2 cheap FTSE 250 shares to consider!

The dividend yields on these FTSE 250 shares are MORE THAN DOUBLE the index average! Here's why they could be…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market beginner could get going in 2025 with a spare £300!

Our writer considers some approaches and principles he thinks might help someone with a few hundred pounds spare to start…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Here’s how I’ll aim for a million in 2025 and beyond buying just a few shares!

Our writer thinks that by investing regularly in proven blue-chip companies, he can aim for a million in coming decades.…

Read more »

Investing Articles

I asked ChatGPT to name the best UK growth stock and it picked this red-hot blue-chip

Harvey Jones asked generative artificial intelligence to name the very best growth stock on the entire FTSE 100. He wasn't…

Read more »

Close-up of British bank notes
Investing Articles

9%+ yields! 3 FTSE 100 shares to consider for 2025

Christopher Ruane highlights a trio of high-yield FTSE 100 shares he thinks income-focussed investors should consider for the coming year…

Read more »

Investing Articles

Want a supercharged passive income in 2025? Consider this high-yield dividend hero!

Looking for the best high-yield income shares to buy this year? Here's one I expect to deliver large and growing…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Micro-Cap Shares

At 3.3p, could penny stock GSTechnologies generate huge gains for investors?

Penny stock GSTechnologies is absolutely on fire at the moment. Could it be worth considering as a high-risk/high-reward investment?

Read more »