5 Causes to Purchase Coca-Cola Inventory Like There’s No Tomorrow

Coca-Cola (KO -4.52%) is a dependable inventory for long-term buyers. In case you had invested $10,000 within the beverage big 30 years in the past, your funding can be price $50,700 at this time and paying out about $1,450 in annual dividends.

In case you had persistently reinvested your dividends, that funding can be price $103,800 and paying almost $2,970 in annual dividends. That is a formidable return for a blue chip stalwart, however it’s nonetheless price shopping for at this time for 5 easy causes.

Picture supply: Getty Pictures.

1. Coca-Cola has diversification and scale

As soda consumption charges decline worldwide, Coca-Cola may look like a dangerous funding. However to counter that development, it is expanded its portfolio with extra manufacturers of fruit juices, teas, sports activities drinks, bottled water, espresso, and even alcoholic drinks. It is also refreshing its traditional sodas with smaller serving sizes, new flavors, and sugar-free variations.

Coca-Cola additionally does not bottle any drinks by itself. It solely sells its concentrates and syrups to a worldwide community of unbiased bottling firms, which then bottle and promote the completed drinks. That streamlined enterprise mannequin provides Coca-Cola extra scale, flexibility, and diversification than many different smaller beverage firms.

2. Coca-Cola’s enterprise is immune to increased tariffs

Coca-Cola is not proof against increased commodity costs and rising tariffs, however it has loads of methods to counter these headwinds. When inflation drove up its uncooked materials costs in 2022 and 2023, it raised its costs to cushion the blow.

This yr, Coca-Cola primarily must take care of the Trump administration’s 25% tariff hike on aluminum imports. Coca-Cola’s bottling companions may need to lift the costs of their completed drinks once more to offset these increased prices.

However throughout Coca-Cola’s newest convention name in February, CEO James Quincey stated that packaging was solely a “small element” of its complete price construction, and that analysts and buyers had been “at risk of exaggerating the impression” of the aluminum tariffs. Quincey additionally stated the corporate would “mitigate” these tariffs with varied hedging methods.

So whereas Coca-Cola cannot be thought-about a tariff-proof inventory, it is a tariff-resistant one that ought to climate that storm a lot better than many different shopper staples firms. Its model recognition and scale also needs to help its future worth hikes.

3. Coca-Cola inventory seems fairly valued

In 2024, Coca-Cola’s natural income rose 12% and its comparable earnings per share (EPS) grew 7%. For 2025, it expects its natural income to develop 5% to six% as its comparable EPS will increase 2% to three%.

At $71 a share, it trades at 24 occasions the midpoint of that EPS outlook. That price-to-earnings ratio won’t look like a screaming cut price, however its repute as a secure haven inventory ought to justify that valuation on this messy market.

4. It is a Dividend King

Coca-Cola is a Dividend King that has raised its payout yearly for 63 consecutive years. Its ahead yield of two.8% won’t appear too spectacular — particularly when the 10-Yr Treasury pays a 4.1% yield — however its low payout ratio of 79% provides it loads of room for future dividend hikes. It also needs to seemingly entice extra revenue buyers because the Federal Reserve continues to chop charges.

5. Buffett is not promoting any Coca-Cola shares

Lastly, Warren Buffett’s Berkshire Hathaway (BRK.A -6.74%) (BRK.B -6.89%) stays considered one of Coca-Cola’s prime buyers with a 9.3% stake price $28.5 billion. That makes it Berkshire’s third-largest place after Apple and American Specific. Berkshire began to put money into Coca-Cola in 1988, and Buffett as soon as claimed to drink 5 12-ounce cans of Coke daily.

Berkshire Hathaway notably offered lots of its prime shares, together with Apple and Financial institution of America, over the previous yr because it boosted its money ranges to document highs. But Buffett hasn’t offered a single share of Coca-Cola for the reason that first quarter of 2012 — and that is a brilliant inexperienced gentle that signifies it is nonetheless an evergreen funding.

Coca-Cola is likely one of the most secure shares to purchase proper now

Coca-Cola is not an thrilling progress inventory, however it’s one of many most secure shares you should purchase as President Donald Trump’s tariffs rip by means of the broader markets. Merely put, shopping for Coca-Cola’s inventory at this time will enable you to sleep quite a bit higher at night time.