Why this top consumer stock is one for passive income investors to consider
For passive income investors on the hunt for reliable dividend payers, there are a handful of FTSE 100 stocks that might fit the bill.
As a big fan of income stocks myself, I think Coca-Cola HBC (LSE: CCH) might be worth a closer look. This is a fast-moving consumer goods (FMCG) company with a steady dividend and what seems like some exciting growth initiatives in the works.
Recent performance
The company is one of the largest bottlers of Coca-Cola Company‘s products, operating in 29 countries across Europe and parts of Africa. While the American business is responsible for the top-secret Coca-Cola recipe itself, HBC does a lot of the leg work in the production and distribution of the goods.
The company’s results for the year ending December 2024 showed a 13.8% jump in organic revenue to €10.75bn (£9.08bn), driven by both volume and pricing increases.
Management reported volume growth in each of its segments as comparable net profits climbed 8.5% to €828.8m (£669.6m). That included strong double-digit volume growth in both the energy drinks and coffee segment as the company continues to deepen its push into these areas.
It’s been a similar story at the start of the year with a strong first quarter helping propel the company’s share price 44.6% higher in 2025 to £40.10 as I write on 22 May.
Valuation
The company’s price-to-earnings (P/E) ratio is currently around 21.1, which puts it in line with its historical average and some other consumer peers. It’s certainly not the cheapest stock on the market, and sits well above the Footsie average of around 13.5.
Coca-Cola HBC recently proposed a dividend of €1.03 (£0.87) per share to be paid in June, marking an 11% increase on the previous payout. That puts the company’s dividend yield at 2.2%.
That’s below the Footsie average of around 3.5%, but that also comes on the back of the recent strong share price gains. I think the company’s potential growth trajectory and reliable dividend could make it a good addition to a well-diversified portfolio for those investors seeking some more passive income to consider.
My verdict
I like the company’s broad geographic footprint and history as a steady dividend payer. Growth in areas like energy drinks and coffee is promising for the company’s future diversification too.
Of course, there are some risks to think about. The company has significant currency exposure that can create earnings swings, particularly in emerging markets like Nigeria and Egypt.
There’s also the yield itself. At 2.2% it’s below the average for the Footsie, so investors looking for a high yield may not want to pay the reasonably hefty current share price.
However, I think long-term passive income investors should consider it based on the balanced profile of growth and income in a defensive sector.
The post Why this top consumer stock is one for passive income investors to consider appeared first on The Motley Fool UK.
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The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
