Top 4 Compelling Reasons to Invest in Coca-Cola Stock Immediately

Whether you frequently enjoy Coca-Cola (NYSE: KO) beverages or not, holding Coca-Cola stock in your portfolio is another matter altogether. For those already invested, the benefits are clear. But if you haven’t yet taken the plunge, consider these top four compelling reasons (presented in no particular order) to buy shares of Coca-Cola now.

1. Outstanding Dividend Track Record
While the stock offers a forward dividend yield of 3.2%—respectable but not earth-shattering compared to other yields in the market—there’s more to the story. Coca-Cola isn’t just about current yield; its history of dividend reliability and growth is exceptional. The company has not only paid dividends consistently for decades but has also increased its payout annually for the last 61 years without interruption, signaling more hikes on the horizon.

Moreover, these increases are substantial, with the dividend doubling since 2015 and quadrupling over the past 15 years, a growth rate that has comfortably beaten inflation during that period.

2. Exceptional Business Model
A robust dividend means little unless it’s sustainable, and Coca-Cola’s business is structured to maintain its cash flow across varying economic landscapes.

You might recognize Coca-Cola as a purveyor of beverages, but its model extends beyond bottling. In essence, Coca-Cola is in the business of licensing its brand names and flavors. It collects royalties from products produced and sold by its bottlers. This model benefits Coca-Cola with greater margins, as marketing and advertising a recognized brand is more profitable than the bottling process itself.

Additionally, revenue is more stable and predictable in this role. Bottlers carry much of the operational risks and the impact of fluctuating costs, a situation that has become especially apparent since 2022. This arrangement ensures that Coca-Cola retains a strengthened and sustainable fiscal position.

3. The Power and Influence of Its Brand Presence
Coca-Cola excels in the art of advertising, to such an extent that calling its strategy merely “marketing” fails to encapsulate its proficiency. Its knack for branding goes beyond promoting its beverages; it embeds them into a lifestyle. The enduring impact of the company’s marketing genius is evident from the lingering memory of the “I’d Like to Teach the World to Sing” jingle, still fondly remembered decades after its debut over 50 years ago in Coca-Cola ads.

But Coca-Cola’s repertoire extends far beyond its flagship soda. It boasts a diverse selection of drinks, such as Fresca, Gold Peak tea, Minute Maid juice, Dasani water, and Powerade sports beverages. Though these may not rival the flagship brand in size, Coca-Cola is replicating its success by using a similar marketing playbook.

In addition to providing leverage with retail partners, Coca-Cola’s vast product range appeals to a broader consumer base, which is progressively pivoting away from sugary soft drinks.

4. An Opportune Moment for Investment in Coca-Cola Stock
Now might be an opportune moment to invest in Coca-Cola, as its stocks are currently trading at a compelling value. The price-to-earnings ratios—both past and future—hover around 20, a figure some investors might challenge. However, the market has historically embraced these numbers, recognizing a premium for high-quality investments.

Currently, the stock’s value mirrors its early-2020 position, unchanged since the onset of the pandemic. Over this period, the investing climate favored growth-centric stocks over more stable value stocks like Coca-Cola. With the economic climate undergoing a shift, the preference could tilt back towards value stocks. It wouldn’t be surprising to witness a break in Coca-Cola’s stock stagnation and see it gain momentum in 2024.