Today we look at the Coca-Cola Amatil Ltd [ASX:CCL] share price, with one eye on its dividend.
Coca-Cola, the fizzy drink can be found from Melbourne to Mumbai and is sold in 200-plus countries worldwide. Promoted by sports and movie stars, the company spends over $4 billion annually on promotion and advertisements.
With the world on lockdown what does this mean for Coca-Cola?
CCL share price flat as movement of people grinds to a halt
Coca-Cola presents itself as an interesting product, in that it is nearly ubiquitous. Bars, cafes, cinemas, sports grounds, you name it and the drink is there.
The emergence of the novel COVID-19 virus changed everything. Namely, the purchase of the product relies on the movement of people.
All the places people would usually go to buy Coca-Cola are now in lockdown, including schools and workplaces, meaning that petrol stations are not visited as much, leaving the cold drink out of a fuel purchase. Even vending machines are sitting lonely in areas usually with high foot traffic.
All of this took a dramatic effect on the stock price of Coca-Cola.
In a recent announcement, it was noted that the volume of beverages sold was down 33%, missing out on key sales periods such as Easter and Ramadan.
Group Managing Director Alison Watkins said, ‘At the time of our last COVID-19 update we noted significant volatility across channels and markets as the impacts of the pandemic started to take effect. This has continued.’
CCL share price on support, levels to be aware of
From the lows in March 2019 the CCL share price had a nice run up in price to the high of $13.18 in February 2020, before falling 41.05% in March 2020 to the low of $7.77. Since then, the share price has largely moved sideways, gaining back only around $1.00.
This flat response from the market may be indicating that a return to ‘normal’ may be some time off.
Looking at some levels, the current CCL share price is currently sitting on the support level of $8.63.
If it were to start an upwards move, the levels of $9.34 and $10.31 may become relevant.
But should it fall, $7.87 may become the new floor, which has provided strong support in the past.
The current dividend yield for CCL stands at 5.4%.
But the 33% fall in sales could flow through to its payout ratio in the coming few months.
Their interim report is due out in August. It will be interesting to see if they can claw back the sales, in turn supporting their dividend payment.
This likely hinges on how quickly Australia can ramp up the easing of restrictions.
A bounce in the CCL share price could be the harbinger of a recovery — a leading indicator of sorts.
But for the moment, based on the prolonged sideways trading, it’s hard to see this happening in the immediate future.
If you’re looking for dividend paying stocks, we have a great resource for you, check out Greg Canavan’s Post-Pandemic Dividends report.
You can download that for free here.
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