Get right to it: Invest in Coca-Cola stock with Interactive Brokers as your online trading platform.
Coca-Cola (NYSE: KO) is not just a beverage; it’s a cultural phenomenon that has been around for over a century, symbolizing an enduring legacy in the business world. With its vast global reach and diverse product lineup, Coca-Cola has captured the hearts (and taste buds) of millions. However, investing in stocks can feel overwhelming, especially with the plethora of information and strategies out there.
If you’re serious about investing in Coca-Cola, it is essential to understand the nuances of stock purchase and ownership. From analyzing market trends to evaluating your financial goals, every step counts. Before you take the plunge, it’s crucial to be equipped with the right knowledge and tips to make a smart investment. In this short guide, we’ll explore practical steps to help you successfully buy Coca-Cola stock.
How to Buy Coca-Cola Stock
To navigate the process of purchasing Coca-Cola stock, it’s essential to follow a few straightforward steps that will help you make informed investment decisions.
Step 1: Pick a Brokerage
The easiest and the most convenient way to buy stocks is through a brokerage. This company acts as a regulated intermediary between you (the investor) and the stock market. Due to technology, you can now buy and sell stocks through a broker’s web platform or even a phone app.
If you’re a first-time investor, our guide on the best brokers will help you decide which platform is the best choice for you.
Step 2: Decide How Many Shares You Want
The number of shares you buy depends on share price, risk management strategy and your portfolio size. To make your choice simpler, set a budget, divide that budget by the current share price and you know how many shares you can purchase.
In the interest of diversity, you might spend a percentage of your budget on Coca-Cola stock, allowing this longstanding stock to serve as your safest investment.
As KO currently trades in the mid-$60 range, choosing a broker that offers fractional share ownership might not be necessary for you. However, there is merit in purchasing a single stock, especially one with a solid track record like Coca-Cola. Most people start investing with small amounts of money. As your investment grows, so, too, does your confidence in the marketplace, and it’s easier to see those results with stable investments.
Finally, you must consider any brokerage fees attached to your trade. Add them to your expected order total so that you know how much you are truly spending when completing a transaction.
Step 3: Choose Your Order Type
There is more than one way to instruct a broker on how to buy shares. Thus, it is necessary to understand the basics before investing. If you are new to a certain broker’s platform, make sure you practice on demo accounts before executing a live trade.
- Market order: This is the simplest order that instructs the broker to buy or sell shares right now, regardless of price. This is also the fastest way to buy or sell a stock but you might get a slightly worse entry price.
- Limit order: This order will execute only at a specific price or better. A limit order is handy if you are waiting for a specific price at which you want to buy.
- Bid: This is the greatest price a buyer is willing to pay at the moment.
- Ask: This is the smallest price at which the seller is selling at the moment.
- Spread: The spread is the difference between the bid and the ask. For example, if the bid for KO is $53.21 and the ask is $53.23, then the spread is $0.02. A smaller spread is a sign of good liquidity in the market.
Step 4: Execute Your Trade
Once you have selected and executed the trade, your broker will enter the position for you. You officially own the shares from the moment the order has been filled — all the details will be on your broker’s statement.
KO Stock History
The Coca-Cola Company is an American multinational corporation. Founded in 1892, it is one of the largest beverage companies in the world. The company built its success on a carbonated soft drink invented in 1886 by pharmacist John Stith Pemberton. It operates as a franchised distribution system, supplying the syrup concentrate to bottlers who hold the distributing rights. Besides Coca-Cola, the company’s portfolio features other valuable brands including Diet Coke, Fanta, Sprite, Vitaminwater, Powerade, Minute Maid and Costa Coffee. Headquartered in Atlanta, Georgia, the company has 80,300 employees and a market cap of $297.29 billion.
KO stock chart. Screenshot from TradingView on 8/19/2024
KO Restrictions for Retail Investors
Two main restrictions for retail investors can be IPO exclusion and secondary offering limits.
Needless to say, there are no IPO restrictions. Coca-Cola held an IPO back in 1919, at a price of $40 per share. One share in 1919 would be equal to 9,216 shares today (adjusted for stock splits), or $488,000 at the current share price. With quarterly dividends reinvested, it would be over $10 million.
Also, there are no secondary offering limits. Given the superior profit margins, it is not a surprise that the company prefers to take on debt (instead of diluting the shareholders) to raise capital for short-term emergencies like the COVID-19 pandemic.
Pros of Buying KO
When considering the benefits of purchasing KO, it’s essential to weigh the various advantages that come with this investment.
- Steady dividends: Coca-Cola has consistently paid and increased dividends for decades. This makes it an attractive option for income-focused investors.
- Brand strength: Coca-Cola’s globally recognized brand provides a significant competitive advantage. This strong brand loyalty often translates to consistent sales and market share.
- Diversified portfolio: The company owns numerous beverage brands beyond its flagship product. This diversification helps mitigate risk and provides multiple revenue streams.
Cons of Buying KO
Despite the potential profitability of investing in KO stock, there are some key factors to consider that may warrant caution.
- Slow growth: As a mature company, Coca-Cola may have limited growth potential. Investors seeking high growth rates might find better opportunities elsewhere.
- Health concerns: Shifting consumer preferences toward healthier options could impact sales. The company must continually adapt to changing health trends to maintain market share.
- Currency risk: Coca-Cola’s global presence exposes it to currency fluctuations. These fluctuations can impact the company’s reported earnings and profitability.
America’s Real Choice
Coca-Cola has been a value investor choice for many decades. As a low-volatility stable dividend provider, it is a suitable pick for both retail and institutional investors. Yet investors have to be aware of the price they are paying. The largest risk in investing does not come from poor quality, it comes from buying at prices that are too high.
Although the company faced some headwinds in the last decade — if it successfully restructures its portfolio and avoids getting involved in cultural or political issues, it will be a good turnaround story.
Frequently Asked Questions
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Whether Coca-Cola stock is a good investment depends on your personal financial goals and market conditions. It is advisable to conduct thorough research or consult with a financial advisor before making an investment.
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Yes, you can buy Coca-Cola stock in a retirement account such as an Individual Retirement Account (IRA) or a 401(k) if your plan allows for individual stock investments.
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Most brokerages charge a commission or fee for buying stocks, although many have moved to commission-free trading. It’s important to check your broker’s fee structure before making a purchase.
