Coca-Cola (KO -0.62%) is a venerable, 135-year-old company that is known for selling soda around the world. In fact, the Coca-Cola, Diet Coke, Fanta, and Sprite brands make up four out of the five top-selling soft drink brands in the world. It sells more than soda, too. The company has branched out, selling water, plant-based beverages, teas, and coffees, among other drinks.

While Coca-Cola has undoubtedly been successful, is this still a great stock for dividend-seeking investors?

A tornado of $100 bills.

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Strong history

For starters, Coca-Cola has a long history of increasing dividends. In February, the company announced it would boost the quarterly payment by a penny to $0.42 per share. This made it an impressive 59 straight years that it has increased payments.

When a company reaches half a century, it becomes a Dividend King. Last year, there were only 27 companies that were on this illustrious list. While this is impressive, many companies have raised dividends for years, only for shareholders to receive an unpleasant surprise one day.

Still, this is a good place to start since it shows how important the dividend is to the company, and it has raised it during very trying circumstances over the years, including recessions and a pandemic. But to determine Coca-Cola's dividend sustainability, it is time to look into the company's fundamentals.

The future looks good

There's no getting around the fact that 2020 presented unique challenges for the company. The pandemic hurt its away-from-home sales since places like bars, restaurants, and stadiums closed to the public. Before COVID-19, this segment accounted for about half of its sales.

Coca-Cola's 2020 adjusted sales fell by 9%, although operating income was flat. Through prudent management, its free cash flow was $8.7 billion, meaning it had plenty left over to pay $7 billion of dividends, even in a very difficult year.

I am cautiously optimistic that this year will be better for the company as people get vaccinated and venues open, albeit under limited capacity right now. In 2019, before the pandemic, its adjusted sales rose by 6%, indicating strong demand for its products when consumers have access. CFO John Murphy stated on the company's fourth-quarter earnings call that, "I am confident that our overall strategic direction will enable us to deliver 2021 earnings that are at or above 2019 levels as we emerge stronger."

Achieving greatness?

Coca-Cola's dividend yield is 3.2%, more than double the S&P 500's 1.5% yield. That's certainly another point in the company's favor.

Do these factors add up to a great dividend stock? Considering the company's long-standing commitment to raising dividends, even amid the latest challenges, strong free cash flow, and a higher yield than the overall market, the answer is a resounding yes.

For those of you wishing to buy a dividend-paying stock, Coca-Cola is an excellent choice.