Buy Coca Cola Stock

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Buy Coca Cola Stock

2 Reasons For Buying Coca-Cola Stock

Coca-Cola stock has generated a 169% return over the last 10 years. Meanwhile, the S&P 500 index has given a return of 319% during the same period.

So, it's natural to think why Berkshire Hathaway has 400 million shares of Coca-Cola. One reason for holding Coca-Cola shares for so long is that the company has been raising its dividend for 64 years in a row. In simple words, Coca-Cola has paid $848 million each year to Berkshire Hathaway. This means 65% of the original cost basis.

A strong dividend is one of the strongest reasons to buy and hold Coca-Cola stock. However, there are two more reasons for buying and holding Coca-Cola stock:

Coca-Cola Has A Strong Position

Coca-Cola is a highly durable business and has been around since 1886. So, it is not like a new AI startup with a few years of history. This also means Coca-Cola is not going to disappear all of a sudden.

Coca-Cola stock has navigated pandemics, wars, recessions, and everything in between. This durability alone makes holding Coca-Cola stock a good choice for long-term investors.

Robust Profitability

Coca-Cola has paid around $72.9 billion to investors in dividends from 2016 to 2025. That's way higher than the dividend paid by most public companies.

This also tells us that Coca-Cola is in a robust financial shape. If you think about it, Coca-Cola wouldn't even be able to afford to pay the dividend if it didn't have the financial robustness.

During Q2, the operating income of Coca-Cola was $4.7 billion. The total sales during that period were $13.4 billion. This means Coca-Cola has maintained an operating margin of 35%.

One reason why Coca-Cola has such a good operating margin is that it sources the bottling and distribution to 3rd party partners. In addition, Coca-Cola also has strong pricing power.

This also tells us that Coca-Cola is in a very good shape to keep paying and even raising its dividend yield for the next few years.

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