Key Points
Coca-Cola posted excellent first-quarter results, sending the stock sharply higher.
The company's business is showing its resilience, a major selling point in the current landscape.
Coca-Cola has increased its dividend for more than 60 straight years.
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Coca-Cola (NYSE: KO) has crushed broader equities in 2026 even amid concerns about geopolitical tensions, inflation, and a potential recession. The company's shares are up 13% this year -- versus the S&P 500 return of just 5% -- and the stock isn't that far from its all-time high. Is Coca-Cola still worth investing in at current levels? Let's find out.
A great pick for the current environment
Coca-Cola's shares jumped on the heels of its most recent quarterly update. For the first quarter, Coca-Cola's revenue increased by 12% year over year -- a strong performance for the beverage giant -- to $12.5 billion, on the back of a 3% increase in unit case volume. Coca-Cola's adjusted earnings per share grew 18% year over year to $0.86. The company's free cash flow was $1.8 billion, compared with a negative $5.5 billion in the same period of the previous fiscal year, and Coca-Cola also grew its market share during the period.
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Some might be surprised by Coca-Cola's strong performance, given the significant economic uncertainty we face, marked by higher prices, among other things. However, Coca-Cola has proven time and time again that it boasts an incredibly resilient business. As a consumer staples leader, the company tends to perform relatively well even in challenging times. Further, its brand name effortlessly attracts customers, a significant advantage. We can also point to the company's extensive product portfolio across multiple beverage categories. These strengths highlight why Coca-Cola is an excellent long-term bet.
It doesn't have the kind of growth potential that leading tech companies do. But Coca-Cola can provide some stability to a well-diversified portfolio. Sure, the company faces some long-term risks, such as stiff competition -- including from new market entrants -- changing consumer preferences, and stricter regulations. Coca-Cola has dealt with all these before, though, and successfully so.
The company constantly launches new products to keep up with evolving consumer choices (including healthier or cheaper options to appeal to health-conscious or price-sensitive customers). Coca-Cola can also handle competition, whether from established players in the industry or newer companies, as evidenced by its growing market share during the period. Its wide moat, stemming from its brand name and helping it command shelf space in the largest stores, is another important asset that can help it withstand potential obstacles. Then we can point out that Coca-Cola is a fantastic dividend stock.
It is a Dividend King, or a corporation with 50 or more consecutive annual payout increases. Coca-Cola's streak currently stands at 64. Lastly, Coca-Cola's shares don't seem particularly overvalued. The company is trading at 24.2x forward earnings, compared to the consumer staples average of 22.2x. My view is that, even with its post-earnings jump and trading near all-time highs, Coca-Cola remains an excellent option for long-term dividend seekers.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
