1 Unstoppable Dividend Growth Stock That’s Soaring Past the S&P 500

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1 Unstoppable Dividend Growth Stock That’s Soaring Past the S&P 500

Coca-Cola stock has been outperforming the S&P 500 this year, by a wide margin.

Not only is it a safe haven type of investment, but it also pays a great dividend.

The company’s elevated valuation, however, may be turning some investors off right now.

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After a tough start to 2025, the S&P 500 index has been rallying in recent weeks, and it is getting back to around all-time highs. Concerns around the economy, tariffs, and trade wars appear to be easing in the markets, as investors remain bullish on the

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for the future. But despite this, the S&P’s gains this year are still around zero. It hasn’t been an awful performance, but it also hasn’t been strong, either.

One stock that has dwarfed the market is one that may surprise you. It is, after all, known for being more of a safe dividend growth stock to own rather than a high-powered investment with loads of upside.

The stock I’m talking about is that of soft drink and beverage giant Coca-Cola (NYSE: KO). Its shares are up around 15% in 2025. Could even more gains be likely for the stock this year, and is this an investment you should consider adding to your portfolio today?

Image source: Getty Images.

A big reason investors flock to Coca-Cola’s stock is for its ability to withstand adversity. As a global company, it has a vast distribution network and flexible operations, which can help it minimize the effects of tariffs and trade wars. The company, for example, is looking at using more plastic in its U.S. operations as a possible way to avoid tariffs on steel and aluminum imports.

And while consumers may scale back on discretionary expenditures amid more challenging economic conditions, Coca-Cola’s products are still relatively modestly priced compared to other food items. Demand doesn’t appear to be falling significantly. In the company’s most recent quarter, which ended March 28, Coca-Cola reported a 2% decline in sales, but its organic growth rate, which excludes the impact of foreign exchange, was strong, coming in at 6%. Coca-Cola’s organic growth rate was positive across all of its segments during the quarter.

That stability and consistency can make the

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a popular buy for investors, especially at a time when finding safe investments may prove to be challenging.

Another reason investors may be loading up on Coca-Cola’s stock is for its dividend. It yields 2.8%, which is more than twice what the average S&P 500 stock pays (1.3%). That dividend income can provide some recurring cash flow and boost your overall returns from the stock. In the past five years, the stock has risen by 52%. But when you factor in its dividend, its total returns are far higher at close to 80%.

Story Continues

Coca-Cola’s dividend income is also likely to rise in the future. It belongs to an exclusive club,

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, which have been raising their payouts for 50-plus years. In February, the company announced its most recent increase, which was 5.2%, and which extended its streak to 63 years. Over the past five years, the stock’s dividend has risen by 24%.

Coca-Cola can be a good dividend stock to own over the long haul. The business has solid fundamentals, and its iconic brand gives it a tremendous competitive advantage. The only thing I don’t like about the stock right now is its valuation — it trades at 29 times its trailing earnings. In the long run, you’re still likely to generate a great return from the stock, especially when you factor in its dividend. But with an elevated valuation, its gains over the short term may be a bit light given how strong its performance has been out of the gate in 2025.

If your priority is dividend income and you’re planning to hold for years, then Coca-Cola can still be a solid investment. But you may want to temper your expectations, at least in the short term.

Before you buy stock in Coca-Cola, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 

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for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when 

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 made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $657,385!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $842,015!*

Now, it’s worth noting Stock Advisor’s total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 2, 2025

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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

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was originally published by The Motley Fool

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#Unstoppable #Dividend #Growth #Stock #Soaring

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