Coca-Cola (NYSE:KO) is one of the most renowned dividend stocks in the market. While the company is facing considerable challenges in adapting to the trend toward healthier drinks consumption, this global juggernaut has what it takes to continue paying sweet and sparkling dividends over years to come. Let's take a look at Coca-Cola and three important reasons why the global soft drinks leader is a top dividend stock.

Rock-solid competitive strengths
Sales and cash flows are very important when analyzing dividend stocks, but competitive strengths are even more vital. After all, cash flows don't come out of thin air; a company needs to have a strong enough business model in order to produce growing cash flows in the long term and protect its profits from the competition.

Coca-Cola is the undisputed leader in the global soft drinks industry; the company owns a remarkable portfolio of 17 brands, each making more than $1 billion in global revenues. In addition, Coca-Cola has a pipeline of 20 more sparkling and still beverage brands generating annual sales of between $0.5 billion and $1 billion each, many of which will probably become billion-dollar brands in the medium term.

Source: Coca-Cola.

Coca-Cola's colossal bottling and distribution network provides another source of competitive advantage allowing the company to keep competitors at bay and efficiently introduce new products in markets around the world. Massive scale and abundant financial resources are additional sources of strength for the company.

Opportunities for growth
Consumers in developed markets are increasingly conscious about the health implications of the food and drinks they consume. This represents an important headwind for Coca-Cola, especially when it comes to generating volume growth in big markets such as the U.S.

On the other hand, the company owns 11 billion-dollar brands in the noncarbonated category that continue performing strongly: Sales volume in still beverages increased by an impressive 5% during the second quarter of 2014, and Coca-Cola gained both volume and value share across categories such as sports drinks, tea, energy, coffee, and water during the quarter.

Emerging markets offer plenty of room for growth in the coming years, both in traditional carbonated drinks and healthier products. Nearly 800 million consumers will enter into the middle class by the end of this decade, and Coca-Cola is in a position of remarkable strength to benefit from growing income levels and consumer demand in emerging markets over the years ahead.

Source: Coca-Cola.

The company is also capitalizing new opportunities for growth via partnerships and acquisitions like the ones it's doing with Monster Beverage (NASDAQ:MNST) and Keurig Green Mountain (UNKNOWN:GMCR.DL).

Coca-Cola has recently purchased 16.7% of Monster Beverage for $2.15 billion. Monster is now becoming Coca-Cola's exclusive energy play, and it will have access to the company's enormously valuable distribution network. This is clearly a huge positive for investors in Monster Beverage, and it also shows how Coca-Cola can leverage its financial resources and other competitive strengths to rapidly enter an excitingly growing category such as energy drinks.

Coca-Cola bought a 10% of Keurig Green Mountain for $1.25 billion in February; the company then announced plans to raise its ownership level to 16% of Keurig. Coca-Cola and Keurig Green Mountain signed an agreement to introduce Coca-Cola's products for use in Green Mountain's forthcoming Keurig Cold machine, and they have recently expanded the partnership by making Honest Tea the first Coca-Cola brand to be available via K-cup packs. 

Coca-Cola needs to be careful not to cannibalize its traditional channels too much with its partnership with Keurig Green Mountain. However, it's good to see the company taking an innovative approach to distribution and focusing on opportunities for growth via new channels.

Consistent cash flow generation
Last, but not least, Coca-Cola is a cash-flow generating machine. The company has consistently generated abundant cash flows through all kind of economic scenarios over time, and it has the financial strength to comfortably cover dividend payments.

In the first six months of 2014, Coca-Cola produced $3.44 billion in free cash flows, while dividend payments accounted for only $1.34 billion over that period. In comparison to earnings, current dividend payments represent less than 60% of earnings forecasts for 2014, quite a safe payout ratio for such a solid industry dividend juggernaut.

Source: Coca-Cola.

Coca-Cola has translated its consistently growing cash flows into rising dividend for investors through the decades; the company has increased dividends over the last 52 consecutive years, including a 9% dividend hike for 2014. Coca-Cola yields approximately 3% in dividends at current prices.

Key takeaway
Growth rates in developed markets may remain subdued until Coca-Cola can compensate the decline in soft drinks sales with healthier alternatives. However, considering its remarkable competitive strengths, opportunities for growth in several areas, and outstanding cash flow generation capabilities, Coca-Cola is a top dividend stock to hold for the long term.

Andrés Cardenal has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Keurig Green Mountain, and Monster Beverage. The Motley Fool owns shares of Monster Beverage and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.