Coca-Cola delivers quality metrics and reliable dividends. But has that been enough to beat the S&P 500 in the last five years?Soft drink giant Coca-Cola (KO 0.66%) has struggled since the COVID-19 pandemic. As of Dec. 1, 2025, the stock has underperformed the S&P 500 (^GSPC 0.40%) market index in the last five years: With a 6.9% compound annual growth rate (CAGR) in this period, Coke lagged far behind the broader market's 13.6% CAGR. And the underperformance doesn't go away if you look at total returns ins ...

Core Insights - The article compares the market positions and challenges faced by Coca-Cola and Walmart, suggesting that Walmart may be the better investment choice currently [2][18] Company Overview - Coca-Cola is the largest beverage company globally, established in 1886, while Walmart is the largest brick-and-mortar retailer, founded in 1962 [3][4] - Walmart operates approximately 10,800 stores, with a significant presence in the U.S., where 90% of the population lives within 10 miles of a store, generating annual revenues around $700 billion [4][5] Financial Performance - Walmart's same-store sales in the U.S. increased by 5.3% year-over-year, contrasting with Target's decline of 3.8% and Coca-Cola's modest unit volume sales growth of 1% [16] - Walmart's market capitalization is $870 billion, with a gross margin of 25.87% and a dividend yield of 0.84% [6][7] Market Dynamics - Both companies must provide value to cost-conscious consumers and maintain strong promotional efforts to succeed [2] - Coca-Cola's revenue structure is shifting, with approximately two-thirds of its $12.5 billion revenue last quarter coming from concentrated flavor syrups sold to restaurants [8] Challenges Facing Coca-Cola - Changing consumer preferences are leading to a decline in sugary soda consumption, prompting Coca-Cola to launch healthier options like Simply Pop [11] - The rise of smaller beverage brands and direct-to-consumer sales via the internet is fragmenting the beverage market, posing a challenge to Coca-Cola's dominance [14] - Inflation and increased competition from alternative beverage options are pressuring Coca-Cola's traditional bottling partnerships [13][15] Investment Considerations - Coca-Cola remains a solid choice for dividend income, having raised its dividend for 63 consecutive years, yielding 2.8% [17] - For growth and value-building profits, Walmart is currently viewed as the more reliable investment option, with strong consumer and supplier relationships [18]

Core Viewpoint - Following Warren Buffett's investment strategies, particularly his long-term focus and stock selections, can potentially enhance portfolio value and lead to wealth accumulation [2]. Group 1: Coca-Cola - Coca-Cola is the world's largest nonalcoholic beverage maker, benefiting from strong brand recognition and a global distribution network, which provides a competitive advantage [4]. - The company reported a revenue increase of only 1% in the recent quarter, but has shown consistent revenue and net income growth over the years [5]. - Coca-Cola has a diverse product range and adapts to local market preferences, which supports its growth strategy [7]. - The company has a strong dividend history, having increased its payout for over 50 consecutive years, currently offering a dividend of $2.04, yielding 3%, surpassing the S&P 500's yield of 1.2% [8]. Group 2: American Express - American Express, as a premium credit card company, tends to attract higher-income consumers who are less affected by economic downturns, maintaining spending levels even in tough times [9]. - The company reported a record revenue of nearly $18 billion in the recent quarter, with significant growth driven by millennial and Gen-Z customers, who accounted for 63% of new accounts [11]. - American Express pays a dividend of $3.16 per share, yielding 0.9%, which is also a factor in Buffett's preference for the stock [12]. Group 3: Investment Considerations - Both Coca-Cola and American Express are currently trading at similar valuations, with Coca-Cola's valuation slightly declining and American Express's valuation increasing [13]. - For cautious investors seeking dividend income, Coca-Cola is recommended as a strong buy, especially given its recent dip in valuation [15]. - For growth-oriented investors, American Express is considered a reasonable pick due to its potential for stronger earnings and stock price gains over time [15].

Group 1: Company Overview - PepsiCo's stock has been impacted by short-term challenges, creating a long-term buying opportunity for investors [1][3] - The company has a strong dividend history, having raised its annual payouts for 53 consecutive years [19] - PepsiCo's product portfolio includes snacks and beverages, differentiating it from Coca-Cola, which primarily focuses on beverages [4][5] Group 2: Financial Performance - PepsiCo's revenues have been falling short of estimates, with profit margins leveling off below pre-pandemic levels due to rising costs [9][10] - The company is expected to see low-single-digit percentage revenue growth in 2025, with earnings growth anticipated to follow [13] - Despite recent challenges, PepsiCo's dividend remains secure, with a forward-looking yield exceeding 4.3%, compared to Coca-Cola's yield of less than 3% [19][20] Group 3: Market Conditions - Inflation rates have stabilized, with the U.S. annualized inflation rate at 2.4%, which may support consumer spending on snacks and drinks [16] - Economic growth is projected, with the IMF expecting better GDP growth globally compared to the U.S. in 2025 [17] - Management is focusing on key factors influencing consumer purchases, such as package sizing and healthy snacking [18]

Core Viewpoint - The article emphasizes the importance of long-term investing, highlighting that despite recent market declines, quality stocks present great buying opportunities for investors willing to hold for the long term [1][2]. Group 1: Amazon - Amazon has established leadership in e-commerce and cloud computing, achieving net sales of $638 billion in the latest full year [5]. - The company has consistently grown revenue, net income, and return on invested capital over the years [5]. - Amazon's strategic revamp of its cost structure allowed it to return to profitability and operate more efficiently, particularly by shifting to a regional fulfillment system [7]. - The company's competitive advantages include its extensive fulfillment network and Prime subscription program, which enhance customer satisfaction and loyalty [8]. - Amazon Web Services (AWS) is a significant profit driver, with an annual revenue run rate of $117 billion, and the company is heavily investing in AI technology [9]. - Amazon shares are currently trading at 33 times forward earnings estimates, down from over 42, making it an attractive investment opportunity [10]. Group 2: Coca-Cola - Coca-Cola has seen a 15% increase in stock price this year, contrasting with the struggles of major indexes [11]. - As the largest nonalcoholic beverage maker, Coca-Cola provides safety and stability for investors, especially during economic downturns [11]. - The company boasts a strong brand portfolio and extensive distribution network, contributing to its competitive moat [12]. - Coca-Cola continues to innovate with new flavors and experiences tailored to different markets, supporting its growth [13]. - The company has a long-standing commitment to shareholders, having increased its dividend for over 50 consecutive years, earning it the title of Dividend King [14]. - While Coca-Cola may not offer explosive growth compared to tech companies, it has consistently grown revenue and net income, and is currently priced at 24 times forward earnings estimates, making it a reliable long-term investment [15].