So you're thinking of investing in Coca-Cola (KO 0.66%). One of the great things about Coca-Cola is that I don't have to introduce you to the company -- you already know that it's a titan in the beverage industry. Its business model is even better than most people realize -- when it comes to its flagship drink, it doesn't bother with bottling and distributing billions of bottles -- instead it makes and sells the syrup and leaves most of the rest of the work to bottlers.
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Here's a great green flag for Coca-Cola: It's reasonably valued at recent levels, with a recent forward-looking price-to-earnings (P/E) ratio of 22.8 slightly below its five-year average of 23.3 and a price-to-sales ratio of 6.2 a smidge below its five-year average of 6.3.
Why might you invest in it, especially if you're worried about the effect of tariffs and/or a possible recession? There are plenty of reasons to invest in Coca-Cola:
- It's somewhat tariff-resistant, with much of its business done locally around the world. And it's ready to switch some packaging from aluminum to plastic if needed.
- Its business is somewhat defensive, too: In an economic downturn, consumers might delay buying a new car or going on vacation, but they may still enjoy a relatively inexpensive treat such as a soda.
- One of its competitive advantages is its powerful brand, ranked seventh in the world by Interbrand in 2024, with an estimated value of $61.2 billion.
- It's a dividend-paying stock, with a recent dividend yield of 3% -- and it's been hiking that payout for 63 consecutive years (though, admittedly, slowly). A 3% yield can help you keep up with inflation, and you can expect stock-price appreciation over the long run, too.
- It's diversified, with water, sports, coffee, and tea brands such as Dasani, smartwater, vitaminwater, Topo Chico, BODYARMOR, Powerade, Costa, Georgia, Fuze Tea, and Gold Peak.
So give Coca-Cola some consideration for your long-term portfolio, especially if you're looking for rather dependable income.
