Coca-Cola (KO 0.91%) stock gained 15% in the first quarter of the year, according to data provided by S&P Global Market Intelligence. As the market absorbed the possibility of a new tariff program, investors moved toward safe stocks like Coca-Cola. While the market tumbled yesterday with the full news of the new program, Coca-Cola stock zoomed even higher.
Everyone needs a cold drink
Coca-Cola is an anchor stock for a diversified portfolio because it's so reliable for stability and passive income. It sells some of the most popular beverages in the world, from its namesake Coca-Cola branded products to around 200 brands in the non-alcoholic, ready-to-drink categories beyond cola. These include names you know and love like Sprite, Fresca, Minute Maid, and Fairlife.
NYSE: KO
Key Data Points
Despite continued economic pressure, Coca-Cola has been performing well. It provided a positive fourth-quarter update in February, reporting a 6% year-over-year increase in total revenue and 12% in organic revenue. Earnings per share (EPS) were up 12%, and global unit case volume was up 2%.
Even more in Coca-Cola's favor is that it's finally hitting record sales again. Investors may not realize that Coca-Cola's sales were declining for years. It began to demonstrate improvement before the pandemic, which made it even harder to bounce back. It reported record highs in 2024 for the first time in about a decade at $47 billion. That was during times of severe inflation and macroeconomic upheaval, and it gives investors confidence in Coca-Cola's ability to withstand pressure and global turmoil.
Everyone likes a dividend
Coca-Cola is a Dividend King, and in February, it announced its 63rd consecutive annual dividend increase, from $1.94 in annual payments to $2.04. That's a 5.2% raise, and it's one of the best track records for any dividend stock on the market.
What makes Coca-Cola's dividend even more enticing is that it's high-yielding. Many of the top dividend kings rely on their strong track records of raises as an attractive feature for creating shareholder wealth, even though their yields are mediocre. Coca-Cola's dividend typically yields around 3%. At the current price, Coca-Cola's dividend yields only 2.7% because it moves inversely with stock price.
Is it smart to buy Coca-Cola stock at this price? Not necessarily, since it's trading at a high valuation right now. However, you should have some of these kinds of secure anchor stocks in your portfolio, and if you don't, now's a great time to see why that's so important.
