Updated on March 4th, 2025 by Felix Martinez
Investors should focus on high-quality dividend growth stocks for superior long-term returns. This is the case when reviewing the Dividend Aristocrats, a select group of 69 companies in the S&P 500 Index with at least 25 consecutive years of dividend increases.
We have created a free Excel list of all 69 Dividend Aristocrats and relevant financial metrics such as P/E ratios and dividend payout ratios.
You can download the full list by clicking on the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
We review all 69 Dividend Aristocrats each year. The 2025 Dividend Aristocrats In Focus series continues with a review of beverage giant The Coca-Cola Company (KO).
Not only is Coca-Cola a Dividend Aristocrat, but it is also a Dividend King. The Dividend Kings have increased their dividends for 50+ consecutive years. You can see all the Dividend Kings here.
Related: Dogs of the Dow: The Highest Yielding Dow Jones 30 stocks.
In addition, it has been diversifying away from sparkling beverages in recent years and those efforts have paid off. This article will examine Coca-Cola’s investment prospects in detail.
Business Overview
Coca-Cola is the world’s largest beverage company, owning or licensing more than 500 unique non-alcoholic brands and 200 master brands.
Since its founding in 1886, the company has expanded to more than 200 countries worldwide. It currently has a market capitalization of more than $300 billion, making it a mega-cap stock.
Its brands account for about 2 billion servings of beverages worldwide every day, producing more than $47 billion in annual revenue.
The sparkling beverage portfolio includes the flagship Coca-Cola brand, as well as other soda brands like Diet Coke, Sprite, Fanta, and more.
The still beverage portfolio includes water, juices, coffee drinks, and ready-to-drink teas, such as Dasani, Minute Maid, Vitamin Water, and Honest Tea.
Source: Investor Relations
Coca-Cola delivered strong Q4 and full-year 2024 results, with unit case volume up 2% for the quarter and 1% for the year. Net revenues rose 6% in Q4 and 3% annually, while organic revenue grew 14% and 12%, respectively. Operating income increased 19% in Q4 but fell 12% for the year due to one-time charges. Quarterly EPS rose 12% to $0.51, while full-year EPS held at $2.46.
The company gained market share in the nonalcoholic ready-to-drink sector, expanding its retail presence with 250,000 new outlets and 600,000 new coolers. Returnable glass bottles drove 1.6 billion unit cases, outpacing total volume growth. Sparkling soft drinks rose 2%, led by Coca-Cola Zero Sugar, while other beverage segments saw mixed performance.
Cash flow from operations was $6.8 billion, down 41% due to a $6 billion IRS tax deposit, with free cash flow at $4.7 billion. Excluding the deposit, free cash flow rose 11% to $10.8 billion. Coca-Cola remains focused on leveraging its scale and distribution network to drive growth in 2025.
Growth Prospects
To return to growth, Coca-Cola has invested heavily outside of soda, in areas like juices, coffee, teas, dairy, and water, to appeal to changing consumer preferences.
Due to the success of its growth initiatives, we continue to see Coca-Cola as having a favorable long-term growth outlook.
One reason we like the stock is that it competes in an industry that continues to grow globally in excess of the rate of broad economic growth. This leads to strong overall growth in the industry, which Coca-Cola has certainly been capitalizing on in recent years.
In addition, the ready-to-drink category is sold through highly diversified channels and continues to have mid-single-digit projected growth rates, both for Coca-Cola and the industry.
Source: Investor Presentation
This is particularly true for still beverages like tea, coffee, and water. Coca-Cola’s years-old strategy to diversify away from sparkling beverages is due to this and it is undoubtedly bearing fruit.
Coca-Cola also continues to acquire brands in order to grow, including its acquisition of Costa, a coffee brand based in the UK.
Coca-Cola is doing what it takes to secure its future. In the relatively short time Coca-Cola has owned the coffee brand, it has expanded its offerings, including combining Coca-Cola and coffee in ready-to-drink packages.
Considering all of this, in addition to the company’s buyback program and productivity improvement efforts, we see total earnings-per-share growth of 7% annually over the next five years.
Competitive Advantages & Recession Performance
Coca-Cola enjoys two distinct competitive advantages: its strong brand and global scale.
In addition, Coca-Cola has an unparalleled distribution network. It has the largest beverage distribution system in the world. A new entrant would be hard pressed to recreate this distribution system, even with billions of dollars to invest.
These advantages allow Coca-Cola to remain highly profitable, even during recessions. The company held up very well during the Great Recession:
- 2007 earnings-per-share of $1.29
- 2008 earnings-per-share of $1.51 (17% increase)
- 2009 earnings-per-share of $1.47 (3% decline)
- 2010 earnings-per-share of $1.75 (19% increase)
Not only did Coca-Cola survive the Great Recession, but it thrived. Earnings-per-share grew by 36% from 2007 to 2010, which shows the durability and strength of Coca-Cola’s business model.
The company’s dividend also appears very safe, even after 60 years of consecutive increases. We would expect Coca-Cola to perform well during any future recessions.
Valuation & Expected Returns
We expect Coca-Cola to generate adjusted EPS of $2.95 for 2025. Based on this, Coca-Cola stock trades for a price-to-earnings ratio of 23.8. This is higher than our fair value estimate of 23 times earnings, which means the stock is somewhat under-valued.
An expanding P/E multiple could decrease annual returns by -0.6% over the next five years.
The stock will also generate positive returns through future earnings-per-share growth (estimated at 7%) and the 2.8% dividend yield. Combined, we expect total annualized returns of 9.2% through 2030.
Overall, we expect Coca-Cola stock to generate solid shareholder returns at the current share price, and we rate it a hold.
Final Thoughts
Coca-Cola has made great strides repositioning its portfolio to meet changing consumer tastes. It has built a large portfolio of juices, coffees, and teas, to cater to a more health-conscious consumer.
Diversifying away from sparkling beverages requires more work, but we see solid growth prospects looking ahead.
We rate the stock a hold, but it remains a strong choice for income investors due to its above-average dividend yield and long history of annual dividend increases.
These qualities make Coca-Cola a time-tested Dividend Aristocrat, and a blue-chip stock.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: