Key Points
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Coca-Cola is hitting all-time highs this week, but it doesn’t mean the business is peaking.
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The beverage tastemaker is a Dividend King, thanks to 64 years of annual dividend hikes.
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Coca-Cola’s low beta and more than two years of earnings beats make it one of the safer stocks in today’s climate.
- 10 stocks we like better than Coca-Cola ›
These are bubbly days for Coca-Cola (NYSE: KO). Shares of the pop star hit another all-time high this week. With a carbonated stock chart, this might seem to be the worst time to warm up to the chilly refreshment provider. It’s not.
From the syrupy sweet cadence of dividend hikes to what should be another modest earnings beat later this month, Coca-Cola has earned its upticks. With its generational appeal across a broad range of beverage categories, this could be a great month to consider owning a piece of this iconic brand. Let’s take a closer look at some of the reasons why Coca-Cola is worth buying, even with the stock trading higher than ever right now.
1. It’s a recession-resistant winner
This is an interesting time to be in the market. Investors woke up on Wednesday to news that the ceasefire in Iran has been called off, sending crude oil prices higher and stock prices — initially — lower. The possibility of inflationary-battling rate hikes later this year is starting to feel more like a probability. Consumer sentiment is dragging near a historic multi-year low.
It’s against this backdrop that Coca-Cola is often at its best. It’s a high-margin business doling out a liquid escape for pocket change. The beverage stock provides a creature comfort at an uncomfortable time for market creatures.
Coca-Cola doesn’t deliver monster growth. The stock isn’t cheap. However, what it consistently pours out is stability. Its five-year beta of 0.35 implies that Coca-Cola has had a little more than a third of the volatility of the general market over the past several years. Zoom in, and its one-year beta is roughly zero. Coca-Cola marches to its own sugary beat. If you’re worried about the market right now, a perpetual low-beta name could be a thirst quencher for your portfolio.
2. Dividend, we stan
Coca-Cola stock is a money machine. All it does is sell high-margin syrup and bottling rights to local distributions that bear the grunt work of production and fulfillment. Its trailing net margin of 27.8% — meaning that nearly $0.28 of every dollar in revenue makes it to the bottom line after taxes — is at a 15-year high.
Longtime investors know about the timeless, perpetual growth of Coca-Cola, even if they aren’t as avid followers of its financials as you and I. They see it in their quarterly dividend checks, which keep getting higher with every passing year.
Coca-Cola’s current yield of 2.5% might not compete with a high-yielding money market fund, but it’s almost certain to keep increasing over time. Coca-Cola has delivered 64 consecutive years of hikes, one of just dozens of Dividend King stocks. These aren’t tiny hikes, either. Coca-Cola’s dividend rate has more than doubled over the past 14 years.
3. And the beats keep coming
If you need one final reason to own Coca-Cola this month, you may want to circle July 28 on your calendar. Coca-Cola will announce its second-quarter results that morning. Earnings season is often a time for investors to brace for volatility, but it’s already established that Coca-Cola — while not a risk-free investment — has historically been less volatile than the market.
Coca-Cola’s full-year guidance announced back in April calls for adjusted organic revenue growth of 4% to 5% for all of 2026. Adjusted earnings per share should clock in slightly higher. Analysts see that playing out in the second quarter later this month, with revenue rising 4% to $13.1 billion and adjusted earnings per share climbing 7% to $0.93.
It’s a fair bet that the bottom line will come in a couple of pennies above that. Just see how reality has consistently exceeded expectations for more than two years.
Period
EPS Estimate
Actual EPS
Surprise
Q1 2024
$0.70
$0.72
3%
Q2 2024
$0.81
$0.84
4%
Q3 2024
$0.75
$0.77
3%
Q4 2024
$0.52
$0.55
6%
Q1 2025
$0.72
$0.73
2%
Q2 2025
$0.84
$0.87
4%
Q3 2025
$0.78
$0.82
5%
Q4 2025
$0.56
$0.58
3%
Q1 2026
$0.81
$0.86
6%
The beats on the bottom line have been positive but modest. Its latest quarter’s beat of 6% may not seem like a lot, but it’s a two-year high. It’s just one more way that Coca-Cola is consistent heading into what should be a topsy-turvy earnings season for many investors. Coca-Cola’s all-weather appeal and a steady beat of dividend hikes every February and earnings beats every quarter should continue to serve shareholders well.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
