Motley Fool: Blue chip dividends

Coca-Cola (NYSE: KO) is a stock worth considering if you’re seeking dividend income. The company has raised its annual payout for an impressive 60-plus consecutive years. Over the past five years, it has grown that payout by 24% – a solid pace that helped offset the effects of inflation. Its dividend recently yielded 2.6%.

Coke has an impeccable supply chain and global brand recognition, and its network of bottling partners allows it to maintain high profit margins. Remember that Coca-Cola produces syrups and concentrates, which its bottling partners then use to manufacture, package, merchandise and distribute its products. Coke thereby maintains high operational flexibility across global markets, which can help it withstand region-specific slowdowns.

Thanks in part to its strong brands, Coca-Cola has been able to raise prices amid inflation and largely weather the economic storm in recent years. While sales have not gone through the roof, it has steadily increased its top line – by 6% in 2023, 3% in 2024 and 3% in 2025. This is the type of steady growth that can be counted on for dependable and consistent gains, and it permits future dividend growth.

Coca-Cola is a low-volatility stock, with a beta of only 0.36. (A “beta” of 1.0 means shares are about as volatile as the overall market; one below 1.0 reflects less-than-average volatility.) This is a stellar stock that can be ideal for risk-averse long-term investors.

Ask the Fool

Q. What is “forced selling”? – A.D., Chepachet, Rhode Island

A. It can refer to multiple things. For example, imagine you’ve invested “on margin.” (That’s when your brokerage lends you money to invest with.) If your holdings fall in value significantly, you might receive a “margin call,” requiring you to add money to your account – which you might do by selling some shares. If you don’t take action, the brokerage may force-sell some shares for you.

Meanwhile, if you own shares of a mutual fund and it closes, your shares may be sold and the cash from the sale sent to you. Also, if a fund hasn’t been performing well, many shareholders may sell their shares, requiring the fund managers to sell off some stock the fund owns in order to pay the exiting shareholders what they’re owed. The managers may not have wanted to sell shares, but they were forced to. (Ironically, this can happen after a stock-market crash – a time when the fund managers might prefer to be buying shares of lower-priced stocks, not selling them.)

Q. What’s “the Fed”? – C.B., Kirkwood, Missouri

A. The Federal Reserve is America’s central bank, launched in 1913. Among other things, it’s responsible for managing America’s monetary policy to maximize employment and balance inflation and interest rates; promoting America’s financial stability, including that of its financial institutions; and helping protect consumers. Its seven-member Board of Governors is nominated by the president, confirmed by the Senate and accountable to Congress. The Fed also encompasses 12 Federal Reserve Banks across the country and the Federal Open Market Committee, which influences interest rates, one tool in managing the nation’s money supply. Learn more at FederalReserve.gov.

My Dumbest Investment

My most regrettable investment? Well, my first brokerage account was at Merrill Lynch, and the fees on trades were so high that I always tried to buy in 100-share lots to spread the fee across more shares. I learned about Warren Buffett’s company, Berkshire Hathaway, when it was trading around $1,500 a share. Since I couldn’t afford 100 shares, I didn’t buy any. I count that among my worst investment decisions. – S.B., online

The Fool responds: We can’t argue with you. When Warren Buffett took control of Berkshire Hathaway in 1965, the stock’s price was about $19 per share. In 1996, he created a second class of shares, Class B, with each share originally worth one-30th of the original Class A shares. (In 2010, he split the B shares 50-for-1. So now, each B share, recently priced near $508 apiece, is about 1/1,500 the price of an A share.) If you’d bought a single share at $1,500 long ago, even paying the trading commission, you’d have done well: Those A shares were recently trading at more than $760,000 each!

Some good news is that trading fees have fallen sharply over the past quarter-century or so, and many major brokerages now charge $0 for most trades.