Is Coca-Cola "Faith-Based" Investing at its Best?

Writing in Kiplinger's Personal Finance magazine, columnist James Glassman picked Coca-Cola as a favorite for 2014. Although it did not perform as well as other selections for 2013, Glassman described Coca-Cola as, "...a classic 'faith-based stock'-that is a great company that, by means that can't be predicted, always seems to bounce back." There others like that, such as ExxonMobil XOM and Wal-Mart WMT. Glassman is very bullish on the brand of Coca-Cola, which allows it to, "...always solve its problems." About the brand of Coca-Cola, legendary investor Warren Buffett once stated that, "If you gave me $100 Billion and said, ‘Take away the soft-drink leadership of Coca-Cola in the world', I'd give it back to you and say it can't be done." Not surprisingly, Buffett is a major shareholder of Coca-Cola. The dividend yield of Coca-Cola is always a major attraction for Glassman. For the average member of the Standard & Poor's 500 Index, the dividend is around 1.9%. The dividend yield for Coca-Cola is nearly 50% higher, at about 2.8%. In addition, Coca-Cola, as with ExxonMobil and Wal-Mart, are "Dividend Aristocrats." Those are publicly traded companies that have increased the dividend annually for at least 25 consecutive years. A history like that is something for shareholders to put faith in that it will happen every year. Again, not surprisingly, Warren Buffett is a major shareholder in Wal-Mart and ExxonMobil, too. Coca-Colal does not simply rely on faith to produce its 18.50% profit margin (about twice the market average). It spends more than others to advertise and market. A current campaign in China entails billions to increase its presence, through acquisitions, if needed. Like Glassman, investors should have faith that Coca-Cola will outperform others with long term returns for its shareholders.