When it comes to beverage stocks, there's no denying that Coca-Cola (KO +0.74%) is the real thing. It's not just about its namesake soft drink. Coca-Cola's arsenal includes roughly 200 brands across sparkling, hydration, coffee, tea, juice, and dairy varieties. There's even been a partner-propelled push into alcoholic offerings.
Coca-Cola has been around for 135 years, so it's not a name that needs much of an introduction. Now could be a good time to crack open a stake in this global powerhouse with a presence in more than 200 countries. Let's take a closer look at some of the reasons why Coca-Cola stock looks very appetizing right now.
NYSE: KO
Key Data Points
1. Coca-Cola is effervescent
There are probably more than a few laggards in your portfolio. Coca-Cola isn't one of them. Less than 10% of the country's stocks have posted double-digit gains during this challenging year, and the beverage bigwig is one of them. Coca-Cola shares have risen 17% in 2025, climbing 25% over the past year and 52% over the past five years. It's the second-largest exchange-traded stock with a double-digit percentage gain by market cap.
Its market-besting performance at a time when stock prices aren't cooperating isn't a surprise. Coca-Cola offers reasonably priced and timeless refreshment. This is also a niche where folks are pretty brand loyal. Will folks curb their spending on name-brand beverages if inflationary pressures drive prices higher? Sure. Case volumes could take a hit, but it could more than make that back in the form of higher revenue and earnings. In the meantime, this is a low-beta stock with a historical tendency to perform at a high level.
The new normal may actually even work in Coca-Cola's favor. The rising tide for Coke isn't lifting all bottles. Rival PepsiCo's shares have fallen 6% in 2025, down 16% over the past year. PepsiCo isn't as well positioned as Coca-Cola when it comes to tariffs weighing on future results. Unlike Coca-Cola, which makes the lion's share of its concentrate in the U.S. and U.S. territories, PepsiCo turns to Ireland for a large chunk of its PepsiCo and Mountain Dew syrup production. Coca-Cola is also largely insulated from the trade war because most of its products are bottled and distributed in their home country, often through independent bottlers. Coca-Cola is just collecting its lucrative piece of the action, as its net margin has remained north of 22% over each of the past six years.
Image source: Getty Images.
2. The valuation is reasonable
Coca-Cola stock is within 1% of the all-time high it hit earlier this month. Just 6% of exchange-traded stocks are within 3% of their all-time peak, and Coca-Cola happens to the largest one by market cap. You don't expect a gravity-defying stock to be cheap, and it's a fair knock on the investment today.
Coca-Cola is fetching 25 times this year's expected earnings and just shy of 23 times next year's profit target. Years of resilient growth through economic downturns and even a long-term domestic trend away from both sugary and diet soft drinks are worth a market premium. The stock has seen its revenue rise 26% and operating income climb 35% from where it was five years ago, but that's less than the stock's 52% jump in that time. You can go back to the sudsy era of the dot-com bubble when Coca-Cola was going for more than 50 times earnings, but it's clearly not growing annually at a pace that makes it a screaming bargain at today's multiples.
Thankfully Coca-Cola has a funny way of consistently blowing past analyst earnings estimates. The beats continued over the past year of quarterly results.
| Period | EPS Estimate | Actual EPS | Surprise |
|---|---|---|---|
| Q1 2024 | $0.70 | $0.72 | 3% |
| Q2 2024 | $0.81 | $0.84 | 4% |
| Q3 2024 | $0.75 | $0.77 | 3% |
| Q4 2024 | $0.52 | $0.55 | 6% |
Data source: Yahoo! Finance. EPS = earnings per share (adjusted).
These aren't mammoth-sized positive surprises, but a win is a win. It also should encourage investors to consider that Coca-Cola is trading for less a bit less than 25 times what it will ultimately earn this year and beyond.
3. The dividend is the real thing
Revenue won't rise every year for Coca-Cola, even though historically some of the annual dips are the result of the global soft drink leader selling off its bottling businesses to independent operators. The one thing that is almost a lock to keep rising is the size of its quarterly distributions. Coca-Cola hiked is payouts in February, something that it has done for 63 consecutive years.
The stock is now yielding a decent 2.8%, a dividend that will look even better if the economy softens and interest rates continue to head lower. More importantly for folks hoping that Coca-Cola can keep its disbursements growing, Coca-Cola's forward dividend is less than 70% of what it's expected to post in adjusted earnings this year. Put another way, the payout ratio gives it plenty of wiggle room to keep this enviable streak going.
