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Key Points
Coca-Cola makes and markets consumer products that are perpetually in demand.
It's not the company's revenue growth, however, that's been most rewarding to shareholders.
The beverage powerhouse boasts the sort of enduring quality that long-term investors should always seek.
Are you a true buy-and-hold (and hold) investor? The rewards are well worth it if you pick the right stock and then commit to leaving it alone for a long, long time.
Case in point: Coca-Cola (NYSE: KO). Here's how you would have fared if you had bought a $1,000 stake in the beverage giant 30 years ago.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
There are actually two answers. One of them assumes you didn't reinvest any dividends this stock paid. In this instance, your initial $1,000 position would be worth $3,443 now. If you had reinvested its dividend payments during this three-decade stretch, however, your investment would now be worth $7,374.
Yes, investors' compounded dividend payments did more net work here than simple price appreciation.
While this sort of dividend-driven outperformance doesn't happen all the time, it isn't exactly unusual either. It just takes patience. Note that most of the reinvested dividend position's value didn't really start running away from the non-reinvested holding's value until roughly the last one-third of the time frame in question, when the cumulative, compounding effect of dividend reinvestment really started to kick into high gear.
That being said, choosing quality stocks with true staying power that can consistently grow because their product or service never falls out of favor -- like Coca-Cola -- is still arguably the key to outstanding buy-and-hold gains.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
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James Brumley has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
