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ISA watch! A FTSE 100 dividend growth stock I’d buy for 2020 and never sell

In recent days I discussed a host of FTSE 100 shares that I reckon are great income shares to load up on for the new year. What I didn’t mention, however, is that I believe Coca-Cola HBC (LSE: CCH) – which has raised annual dividends by 30% over the past two years – will remain a great payout grower in 2020 and beyond, too.

City analysts expect last year’s €0.57-per-share reward to be hiked to €0.63 in the current period, and again to €0.70 cents in 2020. There are bigger yields out there than Coca-Cola’s 2.3% and 2.6% for this year and next though. Indeed, these readings lag the FTSE 100 forward average of 4.8% by some margin.

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But this isn’t the point: I consider the bottling giant to be a brilliant income buy over the long term given the rate at which it’s hiking dividends, raising the prospect of some monumental dividend cheques in the years ahead.

Coke’s on fire

Coke, being arguably the world’s most-beloved drinks brand, provides this Footsie firm with the sort of excellent earnings visibility needed to keep raising dividends each and every year.

This quality was illustrated perfectly in the first half of 2019 as, despite the onset of wet and cold weather conditions, sales kept on ticking higher. Volumes across Coca-Cola HBG’s drinks portfolio rose 2.2% to 1.09bn bottles and this pushed net sales revenue 3.8% higher to €3.35bn.

The evergreen appeal of Coke isn’t the only reason why the business is such a formidable profits creator, though. Product innovation is a core part of the company’s growth strategy and is clearly paying off.

Coca-Cola sold 49m cases of new products, flavours, and packaging innovations in the six months to June, with almost 5% of volume growth in the period driven by freshly-minted labels like its Coca-Cola Energy and Coca-Cola Plus Coffee ranges, which were launched in several European countries.

And there’s plenty to get excited about in 2020 as, following the acquisition of Costa Coffee from Whitbread in summer 2018, Coca-Cola plans to launch the hugely-popular coffee brand into 10 of its markets. Launches in the remainder of its markets will follow over the following three years, it says.

A brilliant buy for 2020

So what makes Coca-Cola such a top buy for next year? Well aside from the attraction of more meaty dividend hikes, earnings growth is expected to ratchet up a notch or two, too. A 17% bottom-line rise is currently being predicted by City brokers. This heady improvement is predicted to stretch into 2021 as well, with a 12% profits increase currently being tipped.

While the earnings outlook for many FTSE 100 shares is becoming increasingly problematic – a sign of the worsening macroeconomic and geopolitical backdrop that is smacking global growth – Coca-Cola has no such problems.

The ubiquity and timelessness of its brand can be relied upon to keep profits growing, however challenging broader economic conditions become, and this is what makes it a particularly great share to buy for 2020.

I reckon it could attract swathes of safe-haven buying interest in the remainder of this year and beyond, making it fully worthy of a premium share price (as shown by its forward price-t0-earnings ratio of 19 times).

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Royston Wild has no position in any of the shares mentioned. 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.

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