Why This Consumer Staples Giant Deserves a Place in Long-Term Portfolios

When building a buy-and-hold investment strategy, selecting the right dividend stock requires careful consideration of three critical factors: business fundamentals, dividend reliability, and valuation. Coca-Cola stands out as a compelling option that checks all three boxes, offering an exceptional stock yield compared to broader market benchmarks.

A Business Built to Endure Economic Cycles

Coca-Cola operates at the intersection of scale and operational excellence. The beverage manufacturer commands unmatched distribution networks, sophisticated marketing capabilities, and a proven track record of innovation. These strengths position the company to weather market turbulence and consolidate competitive advantages through strategic acquisitions.

Recent performance metrics underline the company’s momentum. In the third quarter of 2025, organic sales growth reached 6%, with adjusted earnings expanding at an identical pace. This outpacing of sector peers reflects the company’s ability to maintain pricing power and market share even as consumer preferences evolve. The resilience of the business model—operating in an industry historically insulated from economic volatility—adds another layer of security for risk-averse investors.

The Dividend Yield Advantage

At 2.9%, Coca-Cola’s current dividend yield significantly outpaces the S&P 500’s meager 1.1%, establishing the stock as an attractive income generator for dividend-focused portfolios. While not the highest yield available within consumer staples (averaging 2.7%), the combination of yield magnitude and underlying business strength creates a favorable risk-reward equation.

This stock yield represents real shareholder value, particularly for investors prioritizing consistent cash returns. The stability of this income stream is further reinforced by an extraordinary commitment to shareholders.

An Unmatched Track Record of Shareholder Returns

Coca-Cola’s board has upheld an unbroken 63-year streak of annual dividend increases—a distinction placing the company in the top tier of the Dividend King hierarchy. This extended commitment demonstrates management’s confidence in the business model and prioritization of shareholder wealth accumulation over decades.

For buy-and-hold investors, this dividend history provides a foundation of predictability. The company has proven its ability to grow shareholder distributions through varying economic environments, geopolitical challenges, and sector-wide disruptions.

Valuation: A Rare Opportunity

The current market environment presents an anomaly. Despite Coca-Cola’s strong operational performance, sector-wide headwinds have created valuation inefficiencies. The stock’s price-to-earnings and price-to-book ratios have contracted below their five-year historical averages, while the price-to-sales ratio remains near historical norms.

This pricing dislocation suggests the market has temporarily undervalued a business with superior fundamentals. For long-term investors seeking a reliable dividend stock with solid growth prospects and reasonable entry valuations, the confluence of factors creates a noteworthy investment window.

The case for Coca-Cola rests on three pillars: a resilient, growing business; a demonstrated commitment to returning capital through dividend growth; and an entry point that doesn’t command a premium. These elements combine to justify consideration for portfolios structured around multi-decade holding periods.