Key Points
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Coca-Cola shares are up 35% this year versus about 11% for the S&P 500.
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Price increases added about four points to sales growth last quarter, yet volume still rose 5%.
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The stock yields about 2.2%, and the dividend has risen for 64 straight years.
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Coca-Cola (NYSE: KO) shares are up about 35% this year as of midday trading on Nov. 3, beating the S&P 500‘s (SNPINDEX: ^GSPC) roughly 11% gain. Even at this valuation, the best reason to hold it for the next decade hasn’t changed: Coca-Cola can raise prices without losing customers.
That’s rare in consumer goods, where shoppers often trade down when prices rise. Last quarter, Coca-Cola‘s price increases added about four percentage points to sales growth, yet unit case volume still grew 5% year over year.
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Over the past 50 years, Coca-Cola’s annual volume has declined only once, during the pandemic, and research firm Kantar ranked Coca-Cola the world’s most valuable food and beverage brand. Management’s long-term plan is to balance unit volume growth with price increases. Over a decade, that steady combination can compound earnings and dividends.
Strong brand power doesn’t mean Coca-Cola can’t see slower growth. Management said cost pressures have intensified and expects value to remain a major concern for consumers in 2027. If Coca-Cola can’t raise prices enough to cover its costs, margins could shrink, and its pricing power would look weaker.
Still, investors get paid to wait. The stock yields about 2.2%, about twice the S&P 500’s yield, and Coca-Cola has raised its dividend for 64 straight years. With fourth-quarter results and the first 2027 guidance due in February, investors will soon see whether that pricing power carries into next year.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
