Big brands are important to successful businesses, and the worldwide awareness for both the Marlboro cigarette line sold internationally by Philip Morris International (NYSE:PM) and the namesake Coke brand from Coca-Cola (NYSE:KO) have created corporate empires and strong profits. Yet both companies have faced some criticism from consumer advocates because of potential health impacts, and both have had to take steps to look at ways of responding to that criticism and finding new paths to growth. But for those seeking to invest now, which one is the smarter pick? Below, we'll examine Philip Morris and Coca-Cola more closely to see which looks better on a variety of different key measures of investing success.

Valuation and stock performance

Between these two stocks, Philip Morris International is the only one that has gained ground over the past year. The tobacco giant has given shareholders about 17% in price appreciation and dividend payments, compared to a flat total return for Coca-Cola since this time last year.

It would be reasonable to expect that with better stock performance, Philip Morris would have the higher valuation, leaving Coca-Cola to more closely resemble a value stock. However, that isn't the case, at least by simple conventional valuation methods. When you look at trailing earnings, Coca-Cola's current multiple exceeds 30, while Philip Morris has a somewhat cheaper valuation of 25 times trailing earnings. The disparity narrows when you look at forward earnings expectations, but Philip Morris retains a slight edge, with a forward multiple of 21 compared to Coca-Cola's valuation of 22 times forward earnings. Philip Morris has delivered more returns yet stayed less expensive, giving it an edge over Coca-Cola.

Coca-Cola bottles.

Image source: Coca-Cola.

Dividends

Dividend investors often look to the consumer sector for good payouts, and Philip Morris and Coca-Cola are strong performers within the consumer space. Philip Morris has a slight edge over Coca-Cola in terms of dividend yield, with the cigarette giant's 3.75% yield outpacing the 3.4% figure from the beverage behemoth.

Supporting those yields has been somewhat more difficult recently. Both companies have payout ratios that exceed 90%. Yet that hasn't stopped the companies from increasing their dividend payments to shareholders, albeit at a slower rate than investors have seen in the past. Coca-Cola boasts a 55-year streak of consecutive annual dividend increases. Philip Morris would rival that if you took into account the dividend history of its former parent company, but its limited history as an independent company holds it back by this measure. In terms of dividends, Philip Morris and Coca-Cola have very similar characteristics right now.

Growth prospects and risks

Both Philip Morris and Coca-Cola have hit some obstacles to growth and are working to figure out better ways to move forward. For Philip Morris, the answer appears to be reduced-risk products like its iQOS heated-tobacco system. In its most recent quarter, the tobacco giant saw cigarette shipment volumes plunge 11.5%, hurting net revenue. Philip Morris still managed to boost net income by 4%, but even big gains in iQOS sales weren't enough to keep the company's top line from contracting slightly. The question Philip Morris faces is whether reduced-risk efforts will be able to offset weakness in traditional cigarettes, and investors aren't counting on super-fast growth from Philip Morris overall in the near future.

Coca-Cola has seen similar challenges. The company said after its first-quarter earnings report last month that it would cut 1,200 jobs, with broader efforts intended to cut costs more widely throughout the beverage company. New CEO James Quincey is taking steps to try to counter downward pressure from falling sales, which were down 11% from year-ago levels. With attempts to pursue opportunities in the water, milk, and alternative drink spaces, Coca-Cola is desperately trying to respond to consumer shifts away from sugary soft drinks. With rival drink makers having seen some success, it might be easier for Coca-Cola to follow suit than investors once thought.

In the end, both of these stocks have pluses and minuses, and there isn't as clear-cut a winner between the two companies as we've seen in the past. Given the likelihood of major shifts at Coca-Cola with new management in place, investors who are optimistic about changing trends might prefer the beverage company's growth potential even with a more expensive valuation.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.