Wall Street has a habit of throwing the baby out with the bathwater when bear markets come around. That's why long-term investors should have a wish list, just in case a great company gets caught up in the selling. Beverage giant Coca-Cola (KO 0.03%) is a name that would likely find itself on such a list. Is the nearly 15% stock decline over the past six months enough to make it a buy?

Why so much love?

Coca-Cola has an impressive history and some very prominent fans, including Warren Buffett. One of the most incredible numbers here, however, is the company's streak of annual dividend increases, which stands at 60 consecutive years. That makes it a Dividend King, which requires twice as many annual dividend hikes as the more frequently discussed Dividend Aristocrats. The company's dividend history shows the commitment management has to the dividend and its dividend-focused shareholders. Such a streak couldn't have been achieved without a consistent and robust business.

Two people drinking with straws from bottles on boat.

Image source: Getty Images.

The business is one of the most interesting things about Coca-Cola. It basically sells flavored water (and even plain water, for that matter). Coca-Cola's products are not necessity items, but the company's brands are so strong that customers come back to buy more in good times and bad. It is a powerful consumer staples name with a reach that spans the globe. There's a reason why Warren Buffett owns it and why you might want to, too.

And yet it often trades at a premium price point given the underlying business strengths it possesses and the success it has achieved over the years -- which is why the swift drop over the past six months is so interesting. 

To buy or not to buy

Here's the conundrum. The 14% pullback in the price of the stock is a material drawdown when looking over the past decade. The only period when the stock dropped more over that span was during the 2020 bear market, driven by the coronavirus pandemic economic shutdowns. However, if you look back further, say to the 1980s, the current drop isn't really all that notable. A 25% decline would be far more compelling. And given the concerns about the global economy falling into a recession, such a drop isn't off the table.

The dividend yield, a notable valuation tool for a stock like Coca-Cola that's likely to attract long-term income investors, has risen to 3.1%. That's quite attractive compared to the S&P 500 index, which has a yield of just 1.5% or so even after falling into a bear market. And 3.1% is high historically speaking for Coca-Cola. But it is only about the middle of the road over the past decade, which suggests that the yield isn't actually as compelling as it may at first seem.

Meanwhile, the price-to-sales ratio, a more traditional valuation metric, is providing mixed guidance. This measure, which isn't impacted by the types of one-time items that can obscure a company's ongoing earnings capacity, is slightly below its five-year average but still above its seven-year average. That same basic situation exists with price-to-book value, which assesses value based on balance sheet items. Price-to-earnings isn't as useful here because of an unusual spike in that number a few years ago that biased the longer-term averages higher.

Coca-Cola doesn't look expensive, per se, but it doesn't exactly look cheap, either. It is probably best to consider it fairly priced.

What to do?

If you have a value bias then Coca-Cola probably isn't cheap enough for you to buy just yet. A yield over 3.5% would be far more enticing. That said, if you are a long-term dividend investor looking for a reliable dividend payer at a fair price, it might be in the buy zone. You just have to go in knowing that you are paying full fare for this iconic beverage company, not getting a bargain. However, if dividend consistency is what matters most to you, then that risk/reward trade-off might just be worth it.