The Coca-Cola Company (KO) is an American multinational beverage corporation, and a blue-chip stock with a long history of proven performance. The first glass of Coca-Cola was sold in downtown Atlanta in 1886, and a decade later, the company arrived in Canada, setting up a small factory in downtown Toronto. The company has been present in Canada for over 120 years.
Coca-Cola has become the world’s largest non-alcoholic beverage company and it is one of the world’s largest food and beverage companies, too.
According to data from S&P Global Market Intelligence, shares of Coca-Cola rose 6.3% over the first six months of 2022.
What’s more, prolific investor Warren Buffet’s Berkshire Hathaway owns 400 million shares of Coca-Cola. Here’s what to know if you want to buy into it too.
How to Buy Coca-Cola Stock
1. Choose Where To Invest
If you have a Registered Retirement Savings Plan (RRSP), a Tax-Free Savings Account (TFSA) or a Registered Education Savings Plan (RESP), you might be able to buy and sell shares of Coca-Cola stock within your existing government-registered account.
You can also open an account with a broker. Brokers act as intermediaries between you and the stock market, facilitating your orders to buy and sell stocks. They vary widely when it comes to account minimums, fees, and account options, so do your research to find the right broker for your goals. If you’re looking for a simple and easy way to invest, check out our picks for the best online brokers.
Once you find an option you like, brokers usually have several options for opening an account, including registered accounts and taxable investment accounts. Although taxable investment or brokerage accounts don’t offer the same tax benefits as registered accounts, they do have more flexibility.
Make sure you choose where to invest wisely. RRSPs offer valuable tax benefits, like reducing your taxable income, in exchange for locking up your money until retirement. TFSAs also offer the advantage of tax-free growth on your investments. Taxable brokerage accounts don’t have the same tax benefits, but you can access your money without worrying about early withdrawal penalties, such as withholding tax, for example.
2. Research Coca-Cola
Coca-Cola is a publicly traded company, and as such it is required to file financial statements and annual reports with the U.S. Securities and Exchange Commission (SEC).
Those documents provide insights into the company’s current performance, risks facing its business model and plans for future development. For example, Coca-Cola’s latest annual report details how growing concerns about obesity, sugary soft drinks and potential taxes on sodas could reduce the demand for its products.
In its investor presentations, Coca-Cola outlines its plans for the future to address those issues, including its focus on marketing zero-sugar brands, sparkling water and other beverage options.
3. Decide How Much Money to Invest in Coca-Cola
When thinking about how much money to invest, consider the following factors:
- Price per share: Although some brokers allow you to buy slices of individual shares—referred to as fractional shares—not all have that option. In fact, only Interactive Brokers and WealthSimple allow investors to buy fractional shares in Canada. If your broker doesn’t allow you to buy fractional shares, you’ll have to invest enough money to buy whole shares, plus the costs of any brokerage fees.
- Overall Portfolio: As a blue-chip stock, Coca-Cola may be a solid investment option. Whether it makes sense for you is dependent on the role it plays within your overall portfolio. Experts don’t recommend investing your money in just one or two companies. Instead, the typical guidance is to diversify. That means investing in many different companies in a range of industries.
- Goals: Coca-Cola has a proven track record, but it’s unlikely to have the dramatic returns that newer growth stocks provide. Because its performance is steadier, it tends to be a good investment for long-term investing goals rather than short-term investing or day trading.
4. Place an Order for Coca-Cola Stock
To invest your money in Coca-Cola, log onto your broker’s trading platform. Enter Coca-Cola’s ticker symbol—KO—and the number of shares you want to purchase. Alternatively, you can enter the dollar value you want to invest if your broker offers fractional shares.
You can also usually designate an order type when buying stock. The most common options are market and limit orders. A market order tells the broker to buy or sell the stock right away at the best available price. By contrast, a limit order only goes through once the stock reaches a specified price you pick. Limit orders can be a good idea if you expect a stock’s price to drop soon.
5. Be Aware of Currency Conversion Fees and Taxes
Investment brokerages will charge Canadian investors 1% to 4% in currency conversion fees once when they buy and again when they sell U.S. stocks. These conversion fees can be avoided either by opening a U.S. dollar investment account or a U.S. dollar bank account and keeping all of the money you use to buy U.S. investments in U.S. dollars or you can perform a technique called Norbert’s Gambit.
This so-called gambit is when you buy a stock or ETF that’s interlisted on American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then you ask your brokerage to “journal over” your Canadian shares and turn them into American shares of the same stock, you then sell your American shares in U.S. currency and can use the U.S. dollars that result to purchase any American stock or ETF you want, like Amazon, without converting.
As for taxes, you will be subject to a 15% withholding tax if your U.S. investment produces a dividend. You won’t be taxed by the IRS at all if your investment vehicle is inside an RRSP because this particular registered account is recognized by the IRS, which isn’t the case for every registered account in Canada, such as a TFSA or RESP.
6. Monitor Your Investment’s Performance
Even if you intend on holding your Coca-Cola shares for years, it’s a good idea to periodically check in and review your investment’s performance.
A useful gauge is to compare its performance to the performance of major indexes, like the S&P 500, that provide an indication of how the stock market is performing as a whole.
What to Consider Before Selling Coca-Cola Stock
If you need to sell your shares you can do so by entering Coca-Cola’s ticker symbol in your trading platform, along with the amount you want to sell.
Selling shares at a profit may incur capital gains taxes, you may want to consult a tax professional to talk about when it makes sense to sell and strategies for minimizing your tax bill.
As a Canadian investor, you will likely only owe capital gains to the CRA (50% of the growth value) and not the IRS. The IRS only expects capital gains from you if you have a stake of 5% or more in an American corporation and that corporation’s primary asset is U.S. real estate.
In addition, if you happen to earn $5 million USD from your U.S. investments, your estate will owe estate tax to the IRS when you die.
How to Invest in Coca-Cola With Index Funds and Exchange-Traded Funds (ETFs)
While investing in stocks can be appealing for some investors, investing in a single company—even one as established as Coca-Cola—can be risky. To reduce your overall risk, you can get instant portfolio diversification by investing in index funds and ETFs instead.
Hundreds of index funds and ETFs include exposure to Coca-Cola. Popular options include:
- iShares U.S. Consumer Staples ETF (IYK): This fund provides access to U.S. companies that produce consumer staples. Coca-Cola is one of its largest holdings, but it’s top holdings are Proctor & Gamble (PG) and Pepsico Inc (PEP).
- Consumer Staples Select Sector SPDR Fund (XLP): Like IYK (above), this ETF’s top holdings are Proctor & Gamble, Coke and Pespi. It also has General Mills (GIS), Estée Lauder (EL) and Sysco (SYY) holdings.
- Vanguard Total Stock Market ETF (VTI): If you are looking for a broader ETF, consider a total stock market fund like VTI. It tracks the performance of a benchmark that measures the returns of the overall stock market. Although Coca-Cola is one of its holdings, the biggest holdings are Apple, Microsoft and Alphabet, Inc.