Coca-Cola (NYSE: KO) is on track to increase its dividend for a 64th straight year, according to recent reports. The company's Board of Directors raised its dividend payout last February, marking the 63rd consecutive year of such hikes, and the streak is expected to continue this year.
This makes Coca-Cola a Dividend King, a designation for businesses that have increased dividends annually for at least 50 consecutive years. The company generates robust profits to fund these payouts, with its quarterly operating margin averaging 26.5% over the past five years.
Analysts believe Coca-Cola will rake in $11.9 billion in free cash flow in 2026. The business has durable pricing power, owing to its incredible brand strength, which allows it to consistently raise prices.
There is minimal risk of Coca-Cola's profits dwindling, as it operates in a stable part of the economy with little change or tech disruption. This bodes well for its staying power over many decades, making it a safe and stable stock for investors.
Despite this, the stock may not beat the market in the long run. In the past decade, Coca-Cola has generated a total return of 132%, which falls short of the S&P 500's 330% total return. As a mature business present in over 200 countries and territories, it lacks room for rapid expansion to support outsized gains.
With shares trading at a price-to-earnings ratio of 23.3, Coca-Cola does not look expensive today, providing a solid entry point for investors. However, only dividend investors are likely to be interested in buying and holding the stock long-term.
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