Why This Best Financial Stock Deserves a Spot in Your Long-Term Portfolio

A Compelling Entry Point for Patient Investors

When seeking stocks to hold indefinitely, most investors focus on predictable cash flows and brand resilience. Coca-Cola (NYSE: KO) currently presents such an opportunity—not because it’s flashy, but because market sentiment has created an undervaluation. The beverage leader is trading below its five-year price-to-earnings and price-to-book averages, offering a rare window for dividend-focused investors.

What makes this particularly interesting is the timing. While the broader consumer staples sector faces headwinds from evolving consumer preferences, Coca-Cola is bucking the trend. Third-quarter 2025 organic sales grew 6%, matching adjusted earnings growth of 6%—demonstrating that this isn’t just a cyclical bounce but genuine competitive strength.

The Dividend Track Record That Matters

Sixty-three consecutive years of dividend increases isn’t merely a statistic; it reflects institutional commitment to shareholder returns through thick and thin. This streak places Coca-Cola among the top five longest-running dividend increase sequences globally, solidifying its status as a Dividend King.

For long-term holders, this historical pattern offers something crucial: predictability. Management has repeatedly chosen to prioritize returning cash to shareholders even during challenging periods. That consistency is rare and valuable.

Yield and Valuation: Finding Balance

At 2.9%, Coca-Cola’s dividend yield exceeds the broader S&P 500 (1.1%) by nearly 3x, and sits marginally above the consumer staples sector average of 2.7%. While individual stocks in the sector occasionally offer higher yields, they rarely combine that income with the operational strength Coca-Cola demonstrates today.

The current valuation—marked by below-average price ratios on key fundamentals—suggests the market is pricing in pessimism that may not reflect reality. For investors building a defensive portfolio, this represents a compelling risk-reward dynamic.

Why Business Quality Matters More Than Yield Alone

Coca-Cola’s competitive moat stems from three enduring advantages: unmatched distribution networks, marketing prowess that resonates globally, and continuous innovation in product development. The company’s scale also enables strategic acquisitions that quickly expand its brand portfolio and market reach.

This business model thrives through economic cycles. Even as consumer preferences shift, Coca-Cola’s diversified portfolio and brand loyalty cushion the impact. Meanwhile, competitors like PepsiCo are struggling with 1.3% organic sales growth and declining adjusted earnings—a sharp contrast that highlights Coca-Cola’s operational excellence.

The Bottom Line for Income Investors

Building a buy-and-hold portfolio demands selectivity. The best financial stock for this purpose checks multiple boxes: sustainable competitive advantages, demonstrated management discipline on dividends, reasonable valuation, and near-term operational momentum.

Coca-Cola satisfies all four criteria. While investors might occasionally find higher yields or lower multiples elsewhere, the combination of factors present here—historical reliability, current business strength, and attractive pricing—creates a rare alignment. For those committed to long-term wealth building through dividend compounding, Coca-Cola remains a foundational holding worth considering at current prices.