Investment Spotlight: Taiwan Semiconductor Manufacturing and Coca-Cola
The realm of financial investment is replete with opportunities, tailored to suit diverse goals, investment periods, and risk acceptance levels. Seeking a source of passive earnings? You’ll find an investment suitable. Aiming for sustained growth over time? The market can cater to that too. Setting your sights on the Next Big Thing? There’s an investment category for that. Every investment opportunity serves a unique purpose. Currently, I have a preference for two stocks, one that offers dividends and another that provides a blend of income and growth.
Taiwan Semiconductor Manufacturing (TSMC) stands out as one of my favored selections. Some might argue that its relevance is overshadowed by brighter spotlights shining on more high-profile technology stocks. However, in terms of importance, TSMC often holds equal, if not superior, standing. It is the manufacturing force behind numerous semiconductors (chips) found in a broad array of electronics we use daily, encompassing smartphones, laptops, electric vehicles, gaming consoles, data centers among others.
Most companies conceptualize the chips necessary for their specific product offerings. However, like any grand design, these ideas must be translated into reality. This is where TSMC steps in, expertly materializing the chip designs via their cutting-edge manufacturing mechanisms and infrastructure. This business practice has propelled TSMC ahead in the race, leaving the competition far behind with no signs of potential convergence in the near future.
As the curtains drew on the first quarter of 2025, TSMC held an impressive global foundry market share of 35.3% according to revenue statistics, dwarfing the 6.5% of the nearest competitor, Intel. Such dominance has yielded a healthy return, putting TSMC among the top 100 revenue-generating public companies in the world for the trailing four quarters. Over the past five years, despite its size, the company managed to exceed its revenue twofold.
TSMC’s central role in the technology landscape and superior manufacturing prowess have left its competitors in the dust. It has become the definitive choice for chip manufacturing outpacing other potential competitors in the field. This position ensures sustainable growth and persistence in its field. TSMC also offers a dividend (though maintaining a modest average yield of 1.2% over the preceding year), presenting a dual benefit of growth and income for its investors.
Coca-Cola is another stock on my favorites’ list, though the main allure here is the promise of dividends. Interestingly, in the current fiscal year, Coca-Cola’s stock has gained more than the S&P 500 index with a rise of 13.8%, in comparison to the index’s 5.8%. The ongoing year brought with it uncertainty in the US economy, fueled by the reactions to tariff plans, disagreement on interest rate reduction timelines, and recent legislation.
This newfound uncertainty has seen investors gravitating towards more stable and defensive stocks, and few names resonate with stability like Coca-Cola. The company offers a level of consistency that has made it one of my top choices currently. Projecting the course of the stock’s prices might be unclear, but one thing is certain: the dividend flow will remain unperturbed by economic events.
For an impressive 63 continuous years, the beverage giant has managed to elevate its annual dividends, earning itself the moniker of Dividend King. In 2024, the free cash flow of Coca-Cola saw a dip due to a tax-litigation deposit. However, excluding this amount, the resulting free cash flow was more than capable of covering the dividends paid out. Investors, therefore, have no reasons to worry about the stability of Coca-Cola’s dividends.
Coca-Cola holds an advantageous position owing to its products’ ability to maintain steady sales regardless of economy swings. When faced with economic hardships, a consumer is more likely to reduce dining out, purchasing electronics, or going on vacations rather than forsaking their preferred carbonated drink, water, or tea. Blue-chip investments like Coca-Cola seldom let you down, as such businesses are proven to sustain the test of time.
While you might not witness the high growth that some prominent tech stocks yield, investing in Coca-Cola ensures you are backing a resilient, reliable business. Placing your faith in stocks like Taiwan Semiconductor Manufacturing and Coca-Cola may be the path forward in your investment strategy owing to their consistent performance, profitability, and dividends. The future is unpredictable, but riding the waves of change with such steadfast entities can provide a sense of safety and security.
The investment world is vast and diverse, offering a multitude of opportunities for varying risk profiles and investment durations. Always remember to do your homework before investing and consider the performance track record, resilience, growth prospects, and income-generating ability of the businesses you’re looking towards.
While stocks like TSMC and Coca-Cola offer a dual benefit of growth and income, it’s important to diversify to minimize risk. That said, the key to successful investing involves diligent research, understanding your risk tolerance, and constant monitoring of the market and economic developments.
Remember, investing in the stock market isn’t without its risks, and while the potential for gains is significant, losses are also a reality. Therefore, having a clear investment strategy, understanding market dynamics and your risk tolerance, as well as diversifying your portfolio are essential.
In addition to individual stocks, it may be wise to consider ETFs or index funds for their potential for diversification and lower risk. As investor, it is essential to be clear and realistic about your goals and investment strategy, ensuring the ability to weather market turbulence while taking advantage of potential growth opportunities.
