How Much Coca-Cola Stock Would You Need To Generate $100 In Passive Income?

On a hot summer day, there's nothing more refreshing than a cool drink. Beverage giant Coca-Cola KO has been providing liquid refreshment since 1892 and now sells multiple billion-dollar brands across the soft drinks, water, and coffee categories with brands like Minute Maid, Sprite, Simply, and Dasani. But how can the drinks juggernaut, which first went public way back in 1919, serve your passive income goals?

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Coca-Cola is a dividend aristocrat. To qualify for that designation, a company must be a member of the S&P 500 and have increased its dividend payment for 25 years. Coca-Cola far exceeds that, having raised its dividend for more than double that number. For income-focused investors, this can sound compelling, but how many shares of Coca-Cola would you need to generate $100 a month in passive income? 

Coca-Cola has a forward dividend yield of 3.08% and a forward annual dividend rate of $1.87. This dividend is paid out quarterly, which means investors receive $0.48 four times a year.

The Pricey Path To $100 

To earn an average of $100 per month in dividends, you would have to receive at least $300 every three months. 

$1,200 per year / $1.87 per share = 641.71 shares, which we will round up to 642. If you had 642 shares of Coca-Cola, you would receive an annual dividend of $1,200.54, which works out to just about $100 per month. 

Now that we've figured out how much you would have to own, let's calculate how much Coca-Cola stock you need to own to receive this payment. As of this writing, Coca-Cola is trading for around $62.69 per share. Rounding that up to $63 gives us $40,446 as the necessary investment to achieve the $100 per month goal. 

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Coca-Cola has enjoyed decades of strong performance and most recently delivered an earnings per share surprise of 10.77%. The company hiked up prices as inflation increased, yet it still saw a 1% increase in global shipment volume. In the first quarter earnings statement, CEO James Quincey noted that the company's "global system is primed for sustained success, thanks to the right strategies, clear alignment, a powerful portfolio, and strong execution." 

It's also worth noting that the current analyst consensus around Coca-Cola is $68.50, so it is always possible that this stock could become more expensive over time, which would be good news for those investing to sell rather than solely for passive income. 

This number also assumes that Coca-Cola won't cut its dividend soon and will continue to pay dividends. A company can cut, pause, or eliminate a dividend at any time, so it's important to remember that a dividend is not guaranteed and that, depending on your goals and time horizon, there may be many other ways to invest that sum. Investing in a single stock may not provide the diversification, exposure, or yield many investors require. 

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