Key Points

Legendary dividend stock Coca-Cola has outperformed the S&P 500 in 2026.
Its business is remarkably consistent, which drives the dividend and the stock higher over the long term.
However, buying now does not make much sense after its recent rally.

Warren Buffett may have stepped back from daily operations at Berkshire Hathaway, yet his core investing principles remain central to the firm. Coca-Cola stands as one of his longstanding favorites and continues to feature in the Berkshire portfolio.

Strong returns do not always require tech or high-growth holdings. Coca-Cola operates as a measured Dividend King, valued primarily for its reliable payouts rather than rapid price swings. Even so, the stock has topped the S&P 500 so far in 2026.

Here is what stands out about Coca-Cola's results and whether shares merit purchase at present levels.

Image source: Getty Images.

Consistency has been key for Coca-Cola stock

The numbers confirm the pattern. Coca-Cola has posted gains above 12 percent since January, edging past the broader index by nearly one percentage point. That steady climb stems from the same traits that support its dividend: operational reliability.

The company markets beverages familiar to consumers worldwide, spanning classic sodas along with waters, juices, coffees, and other ready-to-drink options. Growth avenues include selective price increases, brand additions through acquisition or development, and rising global demand tied to population trends.

Thirst persists through economic cycles, rendering the business largely insulated from downturns. This durability explains why Buffett acquired the shares years ago and retained them within Berkshire's holdings.

And so is the price you buy it at

One limitation remains the measured pace of expansion. Analysts project average annual earnings-per-share growth of 7 percent to 8 percent over the next three to five years. Investors therefore benefit from entering at a valuation aligned with that trajectory.

Shares currently trade near 25 times trailing twelve-month earnings. With a PEG ratio above 3.0, the multiple appears elevated relative to expected growth. While quality often commands a premium, the price-to-earnings ratio stood closer to 22 in the fall, offering a somewhat more reasonable entry than today's level.

Buyers seeking improved odds of market-beating gains should aim for a lower multiple. A price-to-earnings ratio near 20 times earnings would better accommodate appreciation as profits rise and would equate to roughly 65 dollars per share based on 2026 estimates. Waiting for a more attractive entry point appears prudent.

Should you buy stock in Coca-Cola right now?

Before purchasing Coca-Cola shares, note the following:

The Motley Fool Stock Advisor team recently named the 10 best stocks for investors to consider now, and Coca-Cola did not appear on that list. The selected names may deliver substantial gains ahead.

Stock Advisor's overall average return stands at 959 percent, well ahead of the S&P 500's 210 percent. Review the current top-10 list through Stock Advisor to join a community focused on individual investors.

Stock Advisor returns as of June 5, 2026. Justin Pope holds no positions in the securities discussed. Berkshire Hathaway is held by The Motley Fool, which maintains a disclosure policy.

The views expressed are those of the author and do not necessarily represent those of Nasdaq, Inc.