Key Points
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Coca-Cola has many strengths, including a solid moat and a commitment to dividend payments.
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The company has delivered earnings growth over time.
- 10 stocks we like better than Coca-Cola ›
Coca-Cola (NYSE: KO) doesn’t generate the same sort of excitement as a big tech player like Nvidia or Palantir Technologies. And you probably shouldn’t count on it to deliver quadruple-digit gains in just a few years, as these companies have done in recent times.
But that doesn’t mean you should avoid Coca-Cola stock. The world’s biggest non-alcoholic beverage maker offers many advantages, from a solid moat to passive income, and over time it’s delivered investors a win. Could buying Coca-Cola today even set you up for life? Let’s find out.
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A beverage powerhouse
Coca-Cola is a name that just about everyone knows, as the company sells its beverages in 200 countries around the world. Along with its eponymous drink, Coca-Cola is also the name behind well-known brands across sparkling beverages, water, coffee, juices, and more — from Sprite to Minute Maid.
The company’s brand strength as well as its solid distribution network offer it a significant moat, or competitive advantage. Coca-Cola’s leadership and gains in market share over the years serve as proof of this. A competitive advantage is key when investing in a stock for the long term, as it suggests the company will continue to thrive — and won’t see its position hurt by rivals.
Though Coca-Cola isn’t in a business that will deliver an enormous surge in earnings in a short period of time, it is in a business that offers steady gains over the long term. Its track record shows this.
KO Revenue (Annual) data by YCharts
A Dividend King
Another reason to like Coca-Cola is for the company’s dividend and its commitment to growing this passive income. It’s a Dividend King, having increased its dividend for more than 50 consecutive years. This is positive as it shows dividend growth is important to the beverage giant, so it’s likely to continue along this path. And more than $5 billion in free cash flow makes this possible.
Now, let’s consider whether this consumer goods giant could set you up for life. If you’d invested $10,000 in Coca-Cola back in 1990, today, including dividends, the value of your investment would surpass $358,000. This is a fantastic return, but considering the cost of living, this amount wouldn’t set you up for life.
But don’t be discouraged about investing in Coca-Cola. It’s very rare when one stock delivers enough for you to quit your job and spend your days in the sun — so it’s risky to invest in just one player and expect life-changing returns.
Instead, it’s a better idea to invest in several quality stocks, like Coca-Cola, that may help you along that path. And in this context, Coca-Cola could help set you up for life.
Should you buy stock in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
