As of market close on July 8, the Nasdaq-100, which consists of the 100 largest non-financial companies listed on the Nasdaq stock exchange, is up a rip-roaring 16% in 2026, while the S&P 500 is up 9% year to date (YTD).
Massive gains from chip stocks Intel, Advanced Micro Devices, Marvell Technology, Micron Technology, and Sandisk, as well as semiconductor equipment manufacturers Applied Materials and Lam Research, are driving the indexes to new highs. So it may surprise investors to learn that Coca-Cola (NYSE: KO) is outperforming the Nasdaq-100 and S&P 500 with a 19% YTD return.
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Coke hit a new all-time high on July 7, and some investors may feel there’s plenty of room to run from here. However, the best reason to buy the dividend stock in July isn’t its momentum, but rather what Coke delivers for investors even during times of uncertainty.
Image source: The Motley Fool.
As reliable as they come
Coke is producing exceptional results despite inflationary and consumer spending pressures on the consumer staples sector. In the first quarter of 2026, Coke grew net revenue by 12% thanks to higher volumes and prices. It also reported an impressive 35% operating margin — a testament to its elite supply chain, marketing, and network of bottling partners that mix, package, and distribute finished products to stores and restaurants.
For the full year, Coke expects organic revenue growth of 4% to 5% and earnings per share (EPS) growth of 8% to 9%, up from $3 in 2025 EPS. The company also expects to generate a staggering $12.2 billion in free cash flow (FCF).
In February, Coke reaffirmed its spot on the list of Dividend Kings — an elite group of companies that have raised their annual payouts for at least 50 straight years — by raising its quarterly dividend from $0.51 to $0.53 per share, marking its 64th consecutive annual dividend increase. Q1 2026 was the first quarter to feature the higher dividend, which cost Coke $2.28 billion, for a run rate of $9.12 billion per year.
Coke’s size and 2.6% yield give it one of the highest dividend yields among S&P 500 companies. But based on its 2026 FCF projection, Coke should still have over $3 billion left over in FCF, even when accounting for its dividend expenses.
Anchor your portfolio with a rock-solid dividend stock
Coke isn’t the kind of showstopping stock that can blow expectations out of the water with an unprecedented surge in revenue or earnings growth. Rather, it embodies steady compounding with a portfolio of global brands that extends far beyond trademark Coca-Cola.
Coke’s competitive advantages are on full display in the present operating environment. Coke has maintained its pricing power and sales volumes during a period when so many of its peers are seeing declines. It continues to rake in the FCF to support a steady and growing dividend, with a yield that far exceeds the S&P 500’s 1.1% yield.
Even when factoring in its epic year-to-date run-up, Coke still fetches a reasonable 26 price-to-earnings (P/E) ratio and a 26 forward P/E ratio. Coke’s 10-year median P/E is 28 — as it has historically commanded a premium valuation because of its high-quality industry leadership.
There’s no shortage of stocks that yield more than Coke or trade at lower multiples. But you can count on one hand the number of blue chip dividend stocks that hold a candle to Coke’s reliability, which is why the stock remains a solid buy in July despite hovering around an all-time high.
Should you buy stock in Coca-Cola right now?
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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Applied Materials, Intel, Lam Research, Marvell Technology, and Micron Technology. The Motley Fool has a disclosure policy.
Coca-Cola Is Crushing the S&P 500 and Nasdaq-100. But There’s an Even Better Reason to Buy the Stock in July. was originally published by The Motley Fool
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