4 Reasons to Buy Coca-Cola Stock Like There's No Tomorrow

Yahoo

27-05-2025

This company's products are consistently marketable in any and all economic environments.
The market tends to reward safe havens like Coca-Cola when other kinds of companies may pose above-average risk.
While not exactly cheap, analysts still say this ticker is underpriced.
10 stocks we like better than Coca-Cola ›
Are you worried the market could still run right back into a tariff-induced headwind, but you also feel like you're running the risk of missing out on more gains? If so, you're not alone. Plenty of people are confused by the mixed messages stocks are currently delivering.
There is a solution. That is, limit your options to names that are apt to perform well regardless of the economic or market environment.
Coca-Cola (NYSE: KO) fits this bill nicely right now for four reasons, two of which aren't even specific to the company's business, but are instead linked to the bigger backdrop.
You know the company. Coca-Cola is of course the planet's best-selling cola. The name has been so popular for so long, in fact, that it's been woven into the fabric of the global culture. Indeed, branding consultancy Interbrand says Coca-Cola is 2024's seventh-best global brand, right behind Toyota and right in front of Mercedes. That's a big deal simply because so many consumers now buy the product out of habit without really worrying about price.
The Coca-Cola Company isn't just its namesake cola, though. Gold Peak tea, Powerade sports drink, Minute Maid juices, Schweppes ginger ale, Dasani water, and several other beverages are all part of the Coca-Cola family, and the company's worked similar marketing magic for all of them. These are all also household names, making them the go-to option out of habit even when most households are pinching pennies.
Coca-Cola stock offers investors something far more specific, however, that matters all the time -- and especially matters in uncertain environments. That's a reliable dividend.
Sure, its forward-looking yield isn't enormous at 2.8%. The percentage yield itself isn't the only detail to consider, though. Dividend growth is also important, in terms of size and frequency.
Coca-Cola is solid by both standards. February's 5.2% year-over-year improvement in its quarterly per-share payout marks the 63rd consecutive year Coca-Cola's dividend payment has been raised. There's no end in sight to the streak either, as this company can consistently afford to pay its dividend from its earnings.
Now's also the right time to plow into Coca-Cola stock simply because you need a little additional safety at this point in time, and Coca-Cola provides it. Other investors are even willing to pay a bit of a premium to get it -- as they should, in light of how well-shielded this company is from tariff-prompted headwinds.
See, unlike many American companies, this one doesn't make much of its own products. It punts this work to third-party bottling partners who handle these duties so it can focus on what it does best. That's marketing and branding. Its network of bottlers also does this work in (or at least near) the countries where these goods will ultimately be consumed, so there's actually very little cross-border shipping going on to tax or tariff. The company's biggest border-related headache is simply repatriating profits generated overseas -- not exactly the worst of problems to have.
Finally, while this stock defied the odds back in February by rallying when most everything else was sinking, it's not made any actual forward progress since then, suspiciously stopping right around August's record high of $72.57. This suggests investors may fear Coca-Cola shares are bumping into a psychological ceiling even if they deserve to be priced higher.
Take a step back and look at the longer-term trend, though. This ticker's been making reliable forward (even if a bit erratic) progress for well over a decade now, shrugging off a wide range of potential stumbling blocks. Yet it's still well below analysts' consensus price target of $79.50, the majority of whom still rate Coca-Cola stock as a strong buy.
The point is, even if the average amateur investor doesn't see it right now, the professional stock-pickers largely all agree that this ticker's stagnation since March doesn't make sense. The crowd may start to agree sooner than later, rekindling this stock's bigger-picture rally as a result.
This isn't the only worthy name to buy right now, of course, nor is right now the only good time to buy this one -- Coca-Cola is a perennial winner even if it's not a high-growth stock. You could always do worse.
But if you're looking for a smart forever holding to buy that will help your portfolio weather the looming unknown we're currently facing, this simple but reliable choice is a great one for almost any investor. Don't overthink it.
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James Brumley has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
4 Reasons to Buy Coca-Cola Stock Like There's No Tomorrow was originally published by The Motley Fool