All It Takes Is 50 Shares of This High-Yielding Dividend Stock to Generate Over $200 in Year Dividends
Key Points
Coca-Cola Femsa is often overlooked in the consumer defensive high-yield dividend conversation.
Its five-year performance may surprise some investors.
The consumer staples sector is prime real estate for dividend investors, with select beverage stocks ranking among the most venerable dividend names in the U.S.
Payout seekers can also be rewarded by adopting a global perspective. Coca-Cola Femsa (NYSE: KOF) proves as much. Often overlooked in the consumer staples dividend conversation, this small large-cap (it has a market capitalization of $23.1 billion) yields an impressive 3.9%.
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This soft drink stock sports an above-average dividend yield. Image source: Getty Images.
Digging deeper into the numbers, based on the stock's closing price of $109.87 on Aug. 12 and its current dividend of $4.24 per share, an investor would need to own about 50 shares of Coca-Cola Femsa to generate $212 in yearly payouts. That's not too shabby when considering this consumer staples stock jumped nearly 140% over the past five years, outpacing "big" Coca-Cola in the process.
KOF Total Return Level data by YCharts
Speaking of the Coca-Cola tie-in, an accurate colloquialism for Femsa is that it's "the Coke of Latin America." However, investors should note that this Mexican company doesn't make Coke or any of the U.S.-based companies' famous brands. But by volume, Femsa is the world's largest bottler of those famous drinks. That status is achieved by serving Latin America. So if you're enjoying a Coke or a Sprite in Brazil, Mexico, or eight other countries in the region, it was likely bottled by Femsa.
Femsa's geographic exposures are material to the long-term case for the stock because Latin America is one of the regions in the world where demand for carbonated soft drinks is steadily growing. So too is consumer appetite for less sugary drinks, which the company also bottles. As one example, Coke Zero sales are rapidly accelerating in Brazil and Mexico, which are the region's two largest economies.
The long-term outlook for the dividend is attractive because Coca-Cola Femsa is expected to generate free cash flow equal to 6.4% of sales from 2026 through 2030 and is unlikely to squander capital by expanding outside its home region.
Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.