You could be forgiven for thinking this is an odd pairing. What's the point in comparing the stocks of a major communications company like Verizon (NYSE:VZ) with the world's leading provider of sugary, carbonated drinks -- in Coca-Cola (NYSE:KO)?

The answer is simple: Given each one's size and stability, they are both popular picks for retirement portfolios. Indeed, each is currently offering dividend yields north of 3%, making them enticing picks in our current low-rate environment.

A man's hand places a chess piece on the tallest of successively higher stacks of coins.

Image source: Getty Images.

But which is the better buy today? That's a very difficult question to answer, especially because they're in such different industries. That said, we're going to examine each through three different lenses, in an attempt to figure out which is the better deal. Here's how they stack up.

Sustainable competitive advantages

For true long-term investors, there's nothing more important than a company's sustainable competitive advantage -- often referred to as a "moat." In Verizon and Coke, we have stalwarts with relatively wide moats, though both are currently shrinking.

Coke's main advantage is its brand value. Anyone, after all, can come up with a recipe for soda, but only Coke has its iconic brand. According to Forbes, Coke's brand is the fifth most valuable in the world, worth over $54 billion. The company also owns a stable of other brands, including Powerade, Vitamin Water, Honest Tea, Odwalla, and Dasani, among others.

The problem, however, is that the powerhouse Coke brands have been receding for years. In fact, soda drinking in the United States peaked over a decade ago and recorded its 11th  straight year of declines in 2016. As America and the world become more health-conscious, they are turning away from traditional Coke products.

Verizon, on the other hand, benefits from the size and quality of its network, as well as sky-high barriers to entry. According to Statista, the top four wireless providers control over 95% of the market in the United States, with Verizon coming in first with a 35% share.

Verizon is also branching out of being "just" a communications company by acquiring content owners and providers, such as parts of Yahoo! and AOL. While the company has been pressured lately by no-contract plans from rivals, it still holds the top-dog status, and it's in an industry likely to stay relevant for the foreseeable future.

Winner: Verizon.

Financial fortitude

As I mentioned at the outset, investors are primarily interested in dividends when they purchase shares of these two. So while it makes sense to want all of the cash coming in to go out in the form of dividends, there's something to say for keeping a nice pile of cash on hand.

That's because every company, at one point or another, will face difficult economic times. Whether macro or company-specific in nature, those that enter these periods with cash will have options -- buy back shares on the cheap, acquire weaker competitors, or outspend rivals into oblivion -- and likely emerge stronger than before.

Keeping in mind that Coke is valued at a 7% premium to Verizon by market cap, here's how the two stack up.

Company

Cash

Debt

Net Income

Free Cash Flow

Verizon

$5.4 billion

$113 billion

$12.3 billion

($0.126 billion)

Coke

$43 billion

$32 billion

$6.2 billion

$6.8 billion

Data sources: SEC filings, Yahoo! Finance. Net income and free cash flow presented on trailing-12-month basis.

Here we have a pretty clear winner. Coke not only has a much more favorable cash position relative to its debt, but it also brought in tons of free cash flow over the past year, while Verizon was negative.

To be fair, much of Verizon's debt is as a result of acquiring companies that add to its moat -- including the remaining stake it didn't hold in Verizon Wireless. And free cash flow was unusually low over the past year because of one-time charges.

Still, it's the trade-off that management made: strengthen the moat while weakening financial fortitude, at least over the medium term.

Winner: Coke.

Valuation

Finally, we have the murky science of valuation. While there's no single metric that can tell you if a stock is cheap or expensive, there are a number of data points we can consult. Here are five that I like to use.

Company

P/E

P/FCF

PEG Ratio

Dividend

FCF Payout Ratio

Verizon

12

NM

4.8

5.2%

7,300%

Coke

24

28

4.9

3.3%

89%*

Data sources: Yahoo! Finance, E*Trade. P/E calculated using non-GAAP earnings when possible. NM = not meaningful due to negative cash flow. * Coke's dividend payments were normalized to have been paid once per quarter in the past four quarters. Because of calendar irregularities, that is not how they appear on the company statements.

Things get murky here. Because Verizon's free cash flow was negative, it makes price-to-free cash flow meaningless, suggesting that the stock is expensive. At the same time, on an earnings basis, it appears to be trading at a 50% discount to Coke. And when it comes to growth trends (the PEG ratio), both stocks look ridiculously expensive.

To get a more clear-headed view, I went back and saw that Verizon has averaged $13.4 billion  in free cash flow over the past three fiscal years. Using that as a proxy is imprecise, but it gives us a P/FCF ratio of 13 and a payout ratio, based on the current dividend, of just 70%.

Looked at in this light, I believe Verizon to be a cheaper stock for dividend investors.

Winner: Verizon.

My winner is...

So there you have it: Coke has the benefit of a powerful brand and a loaded balance sheet. Verizon has chosen to take a little risk with debt, but given the telecom giant's moat and reliable cash flow streams from its subscribers, I believe Verizon to be the better bet at today's prices.

Brian Stoffel has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool has a disclosure policy.