Question

Review the 1) dividends for the past three years and 2) capital structure of coca cola company

	2017	2016	2015
Dividend per Share	1.48	1.4	1.32
Dividend Yield	3.60%	3.20%	3.10%
Dividend Payout	$6320 m	$6043 m	$5741 m

What has occurred with your selected company’s dividend payout, dividend yield, and dividend per share over the past three years? Do you have any explanations for what has occurred? Also, has this company had any stock splits or stock repurchases in recent years?

How does your selected company’s dividend payout, dividend yield, and dividend per share compare with other companies in its industry? Has the company’s dividend strategy been similar to other companies in its industry?

Use Excel to plot your selected company’s earnings and dividends over the past three years. Do you notice any patterns? What dividend policies from the background readings best match these patterns?

Answer 1

Step-1: Dividend and Capital structure table for 3 years:

Particulars	2017	2016	2015
No of Common shares outstanding attributable to COCA-COLA Company
Balance at beginning of year	4288	4324	4366
Treasury stock issued to employees related to stock compensation plans	53	50	44
Purchase of stock of treasury	(82)	(86)	(86)
Balance at the end of year	4259	4288	4324
Dividend Per share	$1.48	$1.4	$1.32
Dividend yield	3.6%	3.2%	3.1%
Dividend Payout	$6320	$6043	$5741

Step-2: Analysis of dividend payout, Dividend yield and dividend rate per share:

1. Dividend Per share:

• In Feb 2016 the company increased its quarterly dividend by 6% raising it to $0.35 per share which is equivalent to a full year dividend of $1.4 per share in 2016.
• In Feb 2017 the company increased its quarterly dividend by 6 percentage raising it to $.37 per share equivalent to a full year dividend of $1.48 per share in 2017.

2.Dividend yield:

• Dividend yield increased by 3.2% for the year 2016 as compared with 2015.
• Dividend yield increased by 12.5% as compared with the dividend yield of 3.2% in 2016.

3.Dividend Pay-out:

• As no of shares outstanding at 2016 is 4288 and no of shares outstanding for the year 2017 is 4259. Which is in decrease in trend so the dividend pay-out also decrease in trend.

Step-3: Stock option plan and repurchase plan:

• COCO-COLA Company sponsors equity plans that provide for the grant of awards including stock options, restricted stock units, restricted stock and performance share units. The fair value of our stock option
• Stock options have generally been granted with an exercise price equal to the average of the high and low market prices per share for the Company's stock on the date of grant. The fair value of each stock option award is estimated using a Black-

Scholes-Merton option-pricing model and is amortized over the vesting period, generally four years. The weighted-average fair value of stock options granted during the past three years and the weighted-average assumptions used in the Black-Scholes.

Stock Repurchase:

• In 2012, the Board of Directors authorized a share repurchase program of up to 500 million shares of the Company's common stock. The table below presents annual shares repurchased and average price per share:

• Year ending December 31	2017	2016	2015
  Number of shares repurchased (in Millions)	82	86	86
  Average Price per share	$44.09	$43.62	$41.33

Step-4: Dividend comparisons with other companies in industry:

• Companies operating in the industry are maintaining at dividend yield of 0.75% to 3%. Average dividend yield of soft drinks industry dividend yield is 1.53%.
• COCO-COLA Company dividend yield is 3.6% so the company is not following the same dividend policy with the industry dividend policy.

Step-5: Dividend Policy of COCO-COLA Company:

• Dividend of the company for three years under review involves at an increase in dividend percentage of 6% for the year 2016 and 2017 as compared with 2015 dividend.