The Coca-Cola Company (NYSE:KO) has been having a good year. The stock is up roughly 27% year-to-date, helped by solid earnings, better demand, and renewed interest in defensive companies. After a gain like that, it is worth taking another look at the dividend. Is Coca-Cola still a good buy for income-focused investors at this price?
A Dividend Built for the Long Term
The Coca-Cola Company (NYSE:KO) has one of the best dividend records in the market. In February, it raised its quarterly dividend to $0.53 per share, or $2.12 annually, from $2.04 in 2025. That was the company’s 64th consecutive annual dividend increase.
The streak has survived recessions, inflation, and plenty of changes in consumer tastes. At recent prices, the $2.12 annualized dividend gives investors a forward yield of roughly 2.4%-2.5%.
The yield is not especially high. That is not really the point with Coca-Cola, though. The appeal is the steady income and the expectation that the company will keep raising the payout over time. The bigger question is whether Coca-Cola is generating enough cash to keep the dividend growing.
Cash Flow Remains a Major Strength
So far, the cash-flow numbers look good. The Coca-Cola Company (NYSE:KO) generated $7.5 billion in operating cash flow and $6.9 billion in free cash flow in the first half of 2026. Management has also raised its full-year outlook. It now expects about $12.4 billion in free cash flow, based on roughly $14.6 billion in operating cash flow and $2.2 billion in capital expenditures.
That gives the dividend a decent cushion. The Coca-Cola Company (NYSE:KO) paid $8.8 billion in dividends during 2025, and its expected 2026 free cash flow should comfortably cover another year of distributions. For dividend investors, that is probably more important than the yield itself.
Strong cash flow also gives Coca-Cola some flexibility. The company can keep raising the dividend while also paying down debt, buying back shares, and putting money back into the business.
Berkshire’s Coca-Cola Bet Still Matters
The Coca-Cola Company (NYSE:KO) also has a special place in Berkshire Hathaway’s portfolio. Berkshire owns 400 million shares, representing roughly 11% of the fund, and KO remains one of its largest equity holdings. The investment says a lot about what Buffett has looked for over the years: strong brands, pricing power, predictable demand, and reliable cash generation.
Berkshire originally invested about $1.3 billion in Coca-Cola. The stake is now worth tens of billions of dollars, while the dividend income has grown significantly over the decades.
Coca-Cola is not relying on its flagship soda alone, either. The company has brands across sparkling beverages, water, sports drinks, coffee, tea, and other categories. In the second quarter, global unit case volume increased 5%, while Coca-Cola gained value share in the broader nonalcoholic ready-to-drink market. That gives it several avenues for growth rather than depending on a single product.
The Bigger Opportunity — and Risk
The Coca-Cola Company (NYSE:KO)’s latest results show that growth is still holding up. Second-quarter revenue increased 7%, organic revenue rose 6%, and comparable EPS climbed 11%. Management then raised its full-year guidance to 5% organic revenue growth and 9% to 10% comparable EPS growth.
The valuation is the part that deserves some caution. Coca-Cola is trading at roughly 26.3 times forward earnings, according to recent market data, compared with roughly 21.9 times forward earnings at the end of 2025. So investors are paying quite a bit more for the company’s earnings than they were at the end of last year.
There is a reason for the premium. Coca-Cola has strong brands, predictable demand, and a reliable dividend. Still, paying more for those qualities means there is less room for disappointment if earnings growth slows. The forward dividend yield is only around 2.4%-2.5%, so the dividend alone is unlikely to drive strong near-term returns. At this valuation, investors will need earnings growth and continued cash-flow expansion to make up the difference.
That does not make Coca-Cola a bad investment. It simply means the price matters more now. Coca-Cola looks less like a high-yield opportunity and more like a long-term dividend compounder. The rally means investors should be a little more careful about the entry price. But for someone looking to hold a dividend stock for years, Coca-Cola still has a lot going for it. The company is generating enough cash to support the dividend, earnings are growing, and management continues to expect further growth. The stock is not cheap, and the yield is not particularly high. Still, Coca-Cola remains the kind of dividend company that can make sense as a long-term holding.
While we acknowledge the risk and potential of KO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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