After a tough start to 2025, the S&P 500 index has been rallying in recent weeks, and it is getting back to around all-time highs. Concerns around the economy, tariffs, and trade wars appear to be easing in the markets, as investors remain bullish on the outlook for the future. But despite this, the S&P's gains this year are still around zero. It hasn't been an awful performance, but it also hasn't been strong, either.
One stock that has dwarfed the market is one that may surprise you. It is, after all, known for being more of a safe dividend growth stock to own rather than a high-powered investment with loads of upside.
The stock I'm talking about is that of soft drink and beverage giant Coca-Cola (KO 0.14%). Its shares are up around 15% in 2025. Could even more gains be likely for the stock this year, and is this an investment you should consider adding to your portfolio today?
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The business remains resilient
A big reason investors flock to Coca-Cola's stock is for its ability to withstand adversity. As a global company, it has a vast distribution network and flexible operations, which can help it minimize the effects of tariffs and trade wars. The company, for example, is looking at using more plastic in its U.S. operations as a possible way to avoid tariffs on steel and aluminum imports.
And while consumers may scale back on discretionary expenditures amid more challenging economic conditions, Coca-Cola's products are still relatively modestly priced compared to other food items. Demand doesn't appear to be falling significantly. In the company's most recent quarter, which ended March 28, Coca-Cola reported a 2% decline in sales, but its organic growth rate, which excludes the impact of foreign exchange, was strong, coming in at 6%. Coca-Cola's organic growth rate was positive across all of its segments during the quarter.
That stability and consistency can make the beverage stock a popular buy for investors, especially at a time when finding safe investments may prove to be challenging.
Dividend income gives investors an extra incentive
Another reason investors may be loading up on Coca-Cola's stock is for its dividend. It yields 2.8%, which is more than twice what the average S&P 500 stock pays (1.3%). That dividend income can provide some recurring cash flow and boost your overall returns from the stock. In the past five years, the stock has risen by 52%. But when you factor in its dividend, its total returns are far higher at close to 80%.
Coca-Cola's dividend income is also likely to rise in the future. It belongs to an exclusive club, Dividend Kings, which have been raising their payouts for 50-plus years. In February, the company announced its most recent increase, which was 5.2%, and which extended its streak to 63 years. Over the past five years, the stock's dividend has risen by 24%.
NYSE: KO
Key Data Points
Is Coca-Cola stock still a good buy today?
Coca-Cola can be a good dividend stock to own over the long haul. The business has solid fundamentals, and its iconic brand gives it a tremendous competitive advantage. The only thing I don't like about the stock right now is its valuation -- it trades at 29 times its trailing earnings. In the long run, you're still likely to generate a great return from the stock, especially when you factor in its dividend. But with an elevated valuation, its gains over the short term may be a bit light given how strong its performance has been out of the gate in 2025.
If your priority is dividend income and you're planning to hold for years, then Coca-Cola can still be a solid investment. But you may want to temper your expectations, at least in the short term.
