Could buying Coca-Cola stock today set you up for life?

Buying a stock that you can hold indefinitely isn’t an impossible dream, but it’s a tall order that few companies really clear. The world is constantly changing, so most companies need to adapt over time to stay relevant. However, Coca cola (K.O -0.50%) stands out for its timeless business model.

A stock doesn’t have to take investors from rags to riches overnight to set them up financially for the rest of their lives. In investing, consistency is key, and Coca-Cola does it better than most.

Here are three reasons why any investor looking to build lifetime wealth should consider adding Coca-Cola to their portfolio.

1. The company is positioned for a lifetime of growth

Coca-Cola is among the most recognizable brands in the world, so it probably doesn’t need a long introduction. Beyond the namesake brand, Coca-Cola’s beverage empire encompasses hundreds of products, including juice, water, tea, juice, coffee, sports drinks, and more. The company has been around since the late 1800s and is one of the few companies that I would feel comfortable assuming will be here a century from now.

Why? People all over the world consume ready-to-drink beverages and Coca-Cola has the best distribution network. It sells its products worldwide in stores, vending machines, restaurants, bars, airplanes, sports venues and more. Coca-Cola won’t surprise you with rapid growth, but it has an almost unstoppable ability to keep growing.

It can increase its sales over time in several ways, including:

• They sell more drinks through marketing and population growth.
• Developing or acquiring new brands and products.
• Price increase.
• Expansion into new product categories such as alcoholic beverages.

Even as a giant worth more than $300 billion with annual sales of $46 billion, Coca-Cola’s opportunities for expansion still seem endless today. About 80% of the world’s population lives in developing or emerging markets, and most still do not consume commercial beverages. Of the 20% of people living in developed countries, only 30% consume at least one Coca-Cola product per week.

2. A dividend fit for a king

Coca-Cola is a mature and profitable business that has shared its profits with investors for generations. Coca-Cola is a Dividend King, part of a prestigious club of companies with at least 50 consecutive years of dividend increases. Today, the stock is yielding 2.7% at the current share price.

Don’t underestimate the power of consistent dividend growth over time. You can see below that dividends contributed more than half of Coca-Cola’s investment returns:

KO data by YCharts.

Coca-Cola’s dividend represents 68% of estimated earnings for 2024, and analysts expect long-term earnings growth in the single digits. That should translate into slow and steady annual dividend increases without jeopardizing the company’s financial health — more of what Coca-Cola has been doing for decades.

3. Be the tortoise, not the rabbit, with a stock of Coca-Cola

Investors must actually own the shares to enjoy the fruits of the combination in the long run. However, this is sometimes easier said than done. Coca-Cola’s docile nature makes the stock easy for investors to own. It has a beta of 0.6, meaning it doesn’t respond to volatility as much as the broader market.

Sometimes investors think that preparing for life means trying to get rich quick. They look for these high-risk stocks that can explode for massive investment gains in a short period of time. But these stocks can go down, losing value just as quickly. Volatility instills fear and greed in many people, and these are often the root causes of most investment mistakes people make in their lives. This is why people buy high and sell low.

Think of Coke as the tortoise, not the rabbit. It’s not flashy, but Coca-Cola can grow and pay higher and higher dividends. Buy Coca-Cola stock regularly, hold it indefinitely, and you’ll be on your way to a lifetime of building wealth.