Good companies don’t go on sale very often. It isn’t hard to understand why, since long-term investors tend to prefer owning good companies. So a reasonable price for a good company can be a huge buying opportunity. That’s the story behind Coca-Cola(NYSE: KO) right now. Here are three reasons why investors might want to buy the iconic soda maker as if there were no tomorrow.
Coca-Cola is one of the world’s largest consumer staples companies. With a market cap of $300 billion, it comes in at No. 3 behind two globally diversified retailers and more direct peer Procter & Gamble(NYSE: PG). Coca-Cola operates among an elite group of companies with an impressive global scale.
Image source: Getty Images.
However, there’s more to the story here than just being big. Coca-Cola has a brand portfolio that is second to none in the non-alcoholic beverage niche. It possesses marketing and distribution strengths that are equal to those of any competitor. And it has an innovation team with a history of introducing compelling new products. Its size, however, is still a help on the product side, because Coca-Cola has the scale to act as an industry consolidator. That allows it to buy its way into new taste and flavor trends as needed.
It would be hard to find a consumer staples company that is managed better than Coca-Cola. Its massive market cap is a sign that investors recognize just how well run it is.
Coca-Cola’s strong business is highlighted in another way. It has increased its dividend annually for over six decades, placing it in the ranks of the Dividend Kings. A company can’t build a dividend record like that without being well run. However, that record also shows that management and the board of directors place a very high value on returning value to shareholders via the dividends the company pays.
If you are an income investor, Coca-Cola’s dividend track record will be a very attractive attribute. So, too, will be its 2.9% dividend yield. To be fair, you can find higher-yielding consumer staples stocks, but those investments will likely come with more risk. And 2.9% is still quite notable today, considering that the S&P 500(SNPINDEX: ^GSPC) yields just 1.1%, and the average yield for a consumer staples maker is 2.7%.
It is hard to complain too much about a Dividend King with an industry-leading business that boasts an above-market and peer-average yield.
Coca-Cola’s relatively high yield hints at the last important factor here. Paying too much for a good company can turn it into a bad investment. However, the valuation metrics around Coca-Cola suggest you are paying a fair to slightly cheap price to buy it today.
Coca-Cola’s price-to-sales ratio is roughly in line with its five-year average. The price-to-earnings and price-to-book value ratios, however, are both below their five-year averages. Looking to the future, the price-to-forward earnings ratio is also below its five-year average.
None of these metrics suggests that Coca-Cola is in the bargain bin. That’s not shocking, since it is actually performing quite well in a difficult consumer staples market. For example, despite consumers becoming increasingly cost-conscious, Coca-Cola’s organic sales rose 6% in the third quarter of 2025, which was actually a slight improvement over the second quarter result.
When you step back and look at the big picture, it is hard to be negative about Coca-Cola. You are looking at a fair price for a well-run business that continues to perform well, despite broader weakness in the consumer staples sector. And you are receiving a reliable and substantial dividend while you wait for investors to recognize the strong underlying value on offer here. If you are a conservative investor, now may be an opportune time to consider purchasing Coca-Cola.
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $502,783!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,126,057!*
Now, it’s worth noting Stock Advisor’s total average return is 975% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Reuben Gregg Brewer has positions in Procter & Gamble. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
Once detected, SOC-X automatically comes with the analysis and specific recommendations how to mitigate the attack in real time, dramatically reducing the mean...
