Mulzar.com

I have been thinking about DRIP investing for a long time now. There are 3 companies that keeps popping up in my head, coco cola, pepsi and yum!. I also noticed that these 3 high dividend companies all outperformed dow jones, s&p500 and other major indices. High dividend companies in general usually outperforms indexes like S&P 500 and dow jones but these 3 high dividend companies really stood out in the crowd of blue chips.

Coca cola is a great company but is the stock price relatively cheap? Hard to say. KO has resisted the financial crisis increadibly well. Trading at $53.66 per share, I would say this one of the few blue chip that was barely touched by the recession. Coca cola has one of the most powerful brands in the world and has steady increased its dividend over the long term. Coca cola is a good DRIP investment in my opinion. Coca Cola’s dividend is 3.00%.

Pepsi reminds of me coca cola ( duh! ). I can barely taste the difference between coke and pepsi. But keep in mind that Pepsi’s main income is not from selling the pepsi drink, the majority comes from other products like snacks, other soft drinks, etc. Coca cola’s major income is coke however. Pepsi’s dividend growth is similar to Coca Cola’s. I wouldn’t be surprised if they both performed roughly the same over a long period of time. Pepsi’s dividend is currently 2.90%.

Yum! Brands is probably the company I will least likely open a DRIP in of three mentioned in this article.

I’m not saying Yum is a bad company, I actually find it to be a very strong and reliable dividend payer. But I do believe both Pepsi and Coca Cola are better DRIP investments than Yum. For those of you that are not familiar with Yum, they own and specialize in quick service restaurants like: KFC, Pizza Hut, Taco Bell, Long John Silver, and A&W All-American Food. They have strong brands. Yum’s dividend is standing strong at 2.40%.

The above companies doesn’t really qualify as high dividend companies. But with their continous growth in dividend only time will tell when they are qualified as high dividend stocks.

Note that moneypaper has a fee on the Coca Cola DRIP program:

But Pepsi only has a enrollment fee after that it’s totally free.

Coca cola’s fee on reinvesting is really going to get costly in the long run. This makes more biased towards pepsi’s DRIP plan.

Good luck fellow DRIP investors!

Tags: DRIP investing coca cola, high dividend stocks outperform

This entry was posted on Tuesday, October 20th, 2009 at 7:41 pm and is filed under Value Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.