Want a Lifetime of Passive Income? Buy Coca-Cola in June and Never Sell.
Key Points
Coca-Cola is an evergreen dividend stock.
It’s trading at a discount to the S&P 500.
Coca-Cola (NYSE: KO), the world's largest beverage company, is a reliable blue chip stock. Including reinvested dividends, it delivered a total return of 659% over the past 30 years. Let's see why it's still a great stock to buy today to generate passive income for life.
Why is Coca-Cola an evergreen investment?
Over the past few decades, Coca-Cola has expanded its beverage portfolio with more brands of bottled water, fruit juices, teas, sports drinks, energy drinks, dairy products, coffee, and even alcoholic beverages. It also refreshed its flagship sodas with smaller serving sizes, new flavors, and healthier versions. That ongoing expansion and evolution enabled the company to continue growing, even as soda consumption rates fell worldwide.
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Image source: Coca-Cola.
Coca-Cola only produces the concentrates and syrups for those beverages, then sells them to independent bottlers, restaurants, and other businesses that produce the finished drinks. That asset-light business model enables it to maintain high operating margins while generating stable cash flow and earnings, even amid economic downturns or choppy macro headwinds. It also doesn't own a struggling packaged foods segment like PepsiCo (NASDAQ: PEP).
That's also why Coca-Cola raised its dividend annually for 64 consecutive years. That makes it an elite Dividend King, having hiked its payout for at least 50 consecutive years. It currently pays a forward dividend yield of 2.6%. That yield might not seem impressive when the 10-Year Treasury still pays 4.5%, but it will attract more attention as interest rates decline.
From 2025 to 2028, analysts expect Coca-Cola's EPS to grow at 6.5% CAGR. That growth will be driven by its AI-powered inventory optimization strategies, the ongoing consolidation of its bottling network, as well as its stronger sales of dairy, energy, and sugar-free drinks. Its bottling partners will also continue to sell a higher mix of smaller, higher-margin cans.
Why is Coca-Cola a good stock to buy in June?
At $83, Coca-Cola's stock still looks reasonably valued at 25 times its trailing earnings. By comparison, the S&P 500 looks historically expensive at 32 times earnings. Rising inflation, the Middle East conflict, and other macro headwinds could deflate those valuations in the second half of 2026.
If that market pullback happens, more investors will rotate toward safe-haven stocks like Coca-Cola. Therefore, it seems to be a great time to buy more shares of Coca-Cola -- and commit to holding them for decades -- to earn a lifetime of reliable dividends.
Leo Sun has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.