The beverage giant is a good safe haven stock for this volatile market.
Coca-Cola (KO -4.52%) is a reliable stock for long-term investors. If you had invested $10,000 in the beverage giant 30 years ago, your investment would be worth $50,700 today and paying out about $1,450 in annual dividends.
If you had consistently reinvested your dividends, that investment would be worth $103,800 and paying nearly $2,970 in annual dividends. That’s an impressive return for a blue chip stalwart, but it’s still worth buying today for five simple reasons.
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1. Coca-Cola has diversification and scale
As soda consumption rates decline worldwide, Coca-Cola might seem like a risky investment. But to counter that trend, it’s expanded its portfolio with more brands of fruit juices, teas, sports drinks, bottled water, coffee, and even alcoholic beverages. It’s also refreshing its classic sodas with smaller serving sizes, new flavors, and sugar-free versions.
Coca-Cola also doesn’t bottle any drinks on its own. It only sells its concentrates and syrups to a global network of independent bottling companies, which then bottle and sell the finished beverages. That streamlined business model gives Coca-Cola more scale, flexibility, and diversification than many other smaller beverage companies.
2. Coca-Cola’s business is resistant to higher tariffs
Coca-Cola isn’t immune to higher commodity prices and rising tariffs, but it has plenty of ways to counter those headwinds. When inflation drove up its raw material prices in 2022 and 2023, it raised its prices to cushion the blow.
This year, Coca-Cola mainly needs to deal with the Trump administration’s 25% tariff hike on aluminum imports. Coca-Cola’s bottling partners could need to raise the prices of their finished beverages again to offset those higher costs.
But during Coca-Cola’s latest conference call in February, CEO James Quincey said that packaging was only a “small component” of its total cost structure, and that analysts and investors were “in danger of exaggerating the impact” of the aluminum tariffs. Quincey also said the company would “mitigate” those tariffs with various hedging strategies.
So while Coca-Cola can’t be considered a tariff-proof stock, it’s a tariff-resistant one that should weather that storm much better than many other consumer staples companies. Its brand recognition and scale should also support its future price hikes.
3. Coca-Cola stock looks reasonably valued
In 2024, Coca-Cola’s organic revenue rose 12% and its comparable earnings per share (EPS) grew 7%. For 2025, it expects its organic revenue to grow 5% to 6% as its comparable EPS increases 2% to 3%.
At $71 a share, it trades at 24 times the midpoint of that EPS outlook. That price-to-earnings ratio might not seem like a screaming bargain, but its reputation as a safe haven stock should justify that valuation in this messy market.
4. It’s a Dividend King
Coca-Cola is a Dividend King that has raised its payout annually for 63 consecutive years. Its forward yield of 2.8% might not seem too impressive — especially when the 10-Year Treasury pays a 4.1% yield — but its low payout ratio of 79% gives it plenty of room for future dividend hikes. It should also likely attract more income investors as the Federal Reserve continues to cut rates.
5. Buffett isn’t selling any Coca-Cola shares
Lastly, Warren Buffett’s Berkshire Hathaway (BRK.A -6.74%) (BRK.B -6.89%) remains one of Coca-Cola’s top investors with a 9.3% stake worth $28.5 billion. That makes it Berkshire’s third-largest position after Apple and American Express. Berkshire started to invest in Coca-Cola in 1988, and Buffett once claimed to drink five 12-ounce cans of Coke every day.
Berkshire Hathaway notably sold many of its top stocks, including Apple and Bank of America, over the past year as it boosted its cash levels to record highs. Yet Buffett hasn’t sold a single share of Coca-Cola since the first quarter of 2012 — and that’s a bright green light that indicates it’s still an evergreen investment.
Coca-Cola is one of the safest stocks to buy right now
Coca-Cola isn’t an exciting growth stock, but it’s one of the safest stocks you can buy as President Donald Trump’s tariffs rip through the broader markets. Simply put, buying Coca-Cola’s stock today will help you sleep a lot better at night.
Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Leo Sun has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.