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Founded in 1886 by Dr John Pemberton, Coca-Cola (NYSE; ticker: KO) is an iconic beverage company that produces and sells multiple brands, including Coca-Cola, Sprite, and Fanta, as well as water, sports drinks, juice, tea, coffee, and more.
According to Coca-Cola, their purpose is ‘to refresh the world and make a difference’. With over 700,000 employees and a market value of US$277 billion, it is the biggest beverage company in the world according to market capitalisation.
The company operates in over 200 countries and territories, selling its products in 30 million retail customer outlets worldwide. Coca-Cola also cooperates with approximately 200 bottling partners and nearly 1,000 system production facilities.
Like many derivatives products, CFDs, or ‘Contracts for Differences’, enable access to the global financial markets, Currencies, Bonds, Commodities, Exchange-Traded Funds (ETFs), Stock Indexes and Stocks, such as Coca-Cola. CFDs are used to speculate and hedge across global markets, with traders and investors often employing margin (leverage) to facilitate trades.
The core structure of a CFD contract involves two parties – a buyer and a seller – committing to fulfil an obligation to buy and sell via a cash-settled transaction. It is important to understand that while purchasing physical shares of Coca-Cola confers partial ownership, CFDs, given the product’s derivative nature, do not permit ownership of the shares. Investors invest/hedge based on the underlying price movement, thus generally making buying and selling shares more straightforward.
Leverage is a fundamental aspect of CFDs that many investors take advantage of. Consider this simple scenario: if you wish to acquire 100 shares of company ABC at US$100 per share, the total cost would be US$10,000 if you buy them outright. However, with FP Markets, you only need to ‘put up’ 20% of that amount (your initial margin), which is US$2,000. CFDs allow traders and investors to leverage their positions and control a larger position size than the initial margin. In the example above, you have leveraged your position by a factor of 5:1.
1. Open an FP Markets Forex and CFD Trading Account
Opening a Forex and CFD trading account with FP Markets is the first step to begin investing in Share CFDs. This can be done by visiting the FP Markets website and clicking the ‘OPEN LIVE’ button in the top right corner of the page. Following this, you must complete a five-step application process to set up your account.
2. Download your Trading Platform
Whether you are a lawyer, doctor, tradesperson, or trader, the effectiveness of any professional often depends on the tools and resources at hand. With FP Markets, you can access many popular trading platforms within the Client Portal. This can be accessed using the login credentials you received after registering your account in Step 1.
Select ' Platforms ' from the menu on the left within the Client Portal, and then choose your preferred trading platform. Share CFD investors tend to favour MetaTrader 5 (MT5) and cTrader platforms.
3. Find the KO Ticker
For any investor, it is important to be able to locate a stock’s ticker. On MT5, this can be done through the platform’s Market Watch, which lists the available financial instruments you can trade with FP Markets.
Although investors tend to type ‘KO’ at the bottom of the Market Watch (Ctrl+M – see the first image below) and simply select the stock, and then drag and drop that stock to the chart’s primary interface (see the second image below), you can right-click anywhere in the Market Watch and select ‘Show All’ to view all the instruments.
4. Place the Buy or Sell Order
Within the MT5 platform, traders and investors often use the main order window (F9) to execute buy or sell orders (see image on the left below). As you can see, the order window allows investors to enter a number of trade parameters, such as order types, trading volume and protective stop-loss orders.
Shorter-term traders, however, may employ the use of the one-click trading feature (Alt+T – see image on the right below); the drawback is that although you can enter a market order with ‘one-click’ by only setting trading volume, it does not offer the ability to enter stop-loss or take-profit orders or choose which order type.
Share CFDs:
Coca-Cola is a leader within the consumer staples sector and a well-known defensive stock. It is also one of the largest globally recognised brand names, with Warren Buffet’s Berkshire Hathaway owning nearly 10% of the company, or 400 million shares currently valued at nearly US$30 billion.
Coca-Cola offers investors a mature, well-known company to invest in, with a reputation for steady, long-term dividend payouts; the company currently offers an annual dividend yield of 3%, translating to a quarterly dividend of US$0.49 per share (rounded). Dividend investors will likely appreciate that Coca-Cola has consistently increased its dividend payout for over 50 years. Although the payout ratio is reasonably high at 78%, it generally remains sub 75%. As of writing, Coca-Cola trades at a forward P/E (price to earnings) of 22.7, suggesting a fair or cheap valuation.
According to the company’s Q3 24 earnings release, Coca-Cola reported better-than-expected revenue growth of US$11.9 billion, which represented a 1% decline from Q2 24 revenue. Chairman and CEO of Coca-Cola, James Quincey, highlighted weaknesses in Chinese sales and added: ‘Our business continues to demonstrate resilience in the face of a dynamic external environment. We are encouraged by our year-to-date performance and our system’s ability to manage near-term challenges while also remaining focused on long-term growth opportunities’.
From a technical point of view, despite the meaningful correction from the all-time high of US$73.53, the trend is mainly to the upside. Couple this with daily support coming in at US$61.44 and trendline resistance-turned-support merging with the level (taken from the high of US$67.20), buyers could enter the fold at this point and attempt to lift the stock higher.
Investing in Coca-Cola through physical shares is an alternative investment option that some investors may explore. Shares of the company trade on formal exchanges, such as the New York Stock Exchange (NYSE). Coca-Cola sells shares of its company to fund growth and fulfil debt obligations, etc.
When investors buy company shares in the secondary market, they are entitled to partial ownership proportionate to the number of shares they purchased. Additionally, investors may be entitled to dividend payouts, as you would be with Coca-Cola, and they will also likely have the ability to vote at the annual company meeting.
Like CFDs, buying and selling shares of Coca-Cola through the futures and options market (leveraged derivatives) is another way to invest in the company.
A futures contract allows an investor to buy or sell the KO stock at a predetermined price on a future date. Both parties in the contract, the buyer and the seller, are legally obligated to fulfil their obligation. However, buying and selling KO stock through the options market allows the contract holder (the buyer) the right but not the obligation to buy or sell the underlying stock at a future price and date. The seller of the options contract, nevertheless, has to commit to the transaction should the contract holder exercise their right to buy or sell. For this right, they must pay the option seller a premium.
Designed to track a market index, like the S&P 500 or Nasdaq, or a basket of assets, ETFs are popular for their diversification features, low cost and liquidity. ETFs trade on formal stock exchanges and function just like regular stocks.
Although single-stock ETFs are now available, most ETF investors select passively managed ETFs (those that track a market index). Several ETFs offer exposure to Coca-Cola; however, while an ETF may list Coca-Cola, it will obviously not precisely mimic the price movements of the individual stock.
1. Does KO pay a dividend?
Coca-Cola does pay a dividend. As of writing, the company’s annual dividend yield is 3%.
2. What are the major differences between CFDs and physical shares?
Key differences between CFDs and physical shares are ownership rights, the location where they’re traded and the leverage offered.
Physical shares (traded on a formal stock exchange) bestow ownership rights. In contrast, CFDs (traded over the counter) are derivatives that enable investors to trade the underlying price movement without taking ownership. Stock investors generally trade using a cash account (no leverage), while CFD investors have access to far greater leverage options.
3. Can I trade KO on MT5?
With FP Markets, KO can be traded on both MT5 and cTrader.
4. What are the trading hours for KO?
The trading hours for KO are between 16:30 and 23:00 GMT+2 (Monday-Friday).
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