Suddenly a dip! Should property income investors and Coca-Cola strike now?

Property income (WKN: 899744) and Cola (WKN: 850663) suddenly reports a dive. Shares in the American drinks company have recently collapsed from over €65 to €61. On the other hand, the US real estate investment trust collapsed from over 73 euros to 66 euros. A discount in the mid to higher single digit percentage range can be quite interesting.

But should income investors buy the dip in Realty Income and Coca-Cola? Let’s take a closer look at these two exciting candidates, their ratings and circumstances. Anyway, I have a strategy for you that I am also following.

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Realty Income & Coca-Cola: Valuation, Currencies & Co.!

The bottom line is that Realty Income and Coca-Cola stocks are now a bit cheaper. The real estate investment trust has a yield of about 4.45% and the beverage company has just under 2.9%. It is valuation standards that are certainly more attractive again. A price-to-FFO ratio of around 16.6 and a price-to-earnings ratio of 28 also show discounts to past valuations.

What is crucial is that growth continues. Realty Income was recently able to increase funds from operations per stock at least in the higher single-digit to double-digit range. Whereas Coca-Cola increased earnings per share with the same amount. We see that reviews are getting cheaper. Both top stocks are at least a Dividend Aristocrat, and the beverage company is even a Dividend King. On this basis of assessment, and that is at least my preliminary conclusion, one could certainly put a first foot in the door again.

However, since these are US stocks that are primarily quoted in US dollars, investors should definitely take the weak euro into account. At least I use a 10% valuation premium to create some balance here. From that perspective, Realty Income and Coca-Cola are solid. But the dive is not enough for me to suggest a bigger position at the moment.

Proceed in stages!

The bottom line is that I see a mechanism with Realty Income and Coca-Cola right now. When there is news about the interest rate, there seems to be a dip. Quality and price strength as well as defensive class can be provided. But with more expensive valuations, these top dividend stocks appear to be a bit more sensitive.

So if I’m looking to build a position, I’d do it a little more staggered. Getting a foot in at the current level can be justifiable. But it wouldn’t be the benchmark for me to take a bigger position. That is and will be my preliminary conclusion.

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Vincent owns shares in Coca-Cola and Realty Income. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola.

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