Could Coca-Cola Be Your Ticket to Becoming a Millionaire by 2035?

Hardly a person hasn’t heard of Coca-Cola (NYSE: KO) given that its namesake soda is one of the best-known brands around the world. The stock has also been a long-term holding in investment legend Warren Buffett’s Berkshire Hathaway portfolio. But is this company worth buying today for investors looking to build a million-dollar portfolio over the next decade? Let’s find out.

Making beverages is all Coca-Cola does, so it is a highly focused consumer staples company. It makes much more than just Coke, with brands that include sports drinks, coffee, and many others. In fact, it is the world’s largest nonalcoholic beverage company, with particular strengths on the marketing and distribution sides of the business. And it’s a highly valuable partner to its retailer customers.

That said, Coca-Cola’s size (it has a market cap of $270 billion) and financial strength also allow it to act as an industry consolidator. Effectively, if a hot new product comes out that fits with its business plan, it can step in and buy the company that makes it. Then it gets to plug that brand into its marketing and distribution system, which usually leads to material growth for the acquisition.

Given the business that the company has created, it would be very difficult for this giant to be brought low by competitors. This is not to suggest that management can rest on its laurels, but as long as it continues to execute well, the business is likely to remain atop the beverage industry for decades to come.

To provide an idea of just how powerful this beverage company’s approach has been, it has increased its dividend annually for over six decades, making it a Dividend King.

This is a great foundation for investors looking to build long-term wealth. And right now is an interesting time to consider buying the stock. The Dividend King’s yield is a touch over 3%, well above the market’s 1.2% and slightly higher than the average consumer staples stock’s yield of around 2.8%. The yield also happens to be about in the middle of the stock’s range over the past decade.

Middle of the road is hardly a huge endorsement. But it highlights the fact that the stock, which is often afforded a premium valuation, is cheaper today than it has been in a little while.

Supporting that is the fact that the price-to-sales (P/S) and price-to-book-value ratios are below their five-year averages right now. Its price-to-earnings ratio is roughly in line with the longer-term average.

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Coke seems fairly priced to a little cheap. Long-term dividend investors wanting to build wealth over time should probably take a closer look. Add in dividend reinvestment, and the company could be a solid cornerstone holding in a millionaire-maker portfolio.

To be fair, Coca-Cola probably won’t get you to a seven-figure portfolio all on its own. The company is huge and is more of a slow-moving giant than a rocket ship ready to blast off into the stratosphere.

But that’s the point. Owning a slow growing industry leader like Coca-Cola can allow you to take a more aggressive stance with other investments even as it helps to build your long-term wealth via its continued, slow, business growth.

The big story here is that the stock looks attractively priced given the strength of the underlying business. This situation exists because Wall Street is worried about its future right now, thanks to things like new weight loss drugs, changing views of eating habits, and even geopolitical tensions.

But if you think in decades and not days, Coca-Cola could be a foundational investment that underpins your path toward a seven-figure portfolio.

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*Stock Advisor returns as of February 3, 2025

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Could Coca-Cola Be Your Ticket to Becoming a Millionaire by 2035? was originally published by The Motley Fool