Finance

Coca-Cola and Constellation Brands: Dividend Titans to Buy Now for Long-Term Gains

Coca-Cola and Constellation Brands are highlighted as compelling dividend stocks due to market strength and value.

byAndres Castro

October 20, 2025, 8:51 AM

The Coca-Cola logo on a smartphone is juxtaposed with a financial stock chart. By JarTee / Shutterstock.com.

Executive Summary

Coca-Cola and Constellation Brands are identified as compelling dividend stock opportunities for long-term investors, based on their robust market positions, consistent payouts, and current valuations.

Coca-Cola is highlighted as a “Dividend King” with 63 consecutive years of payout increases, strong profitability, a capital-light business model, and a 3% forward dividend yield, with its recent stock pullback presenting a potential buying opportunity.

Constellation Brands, despite a 37% year-to-date decline and recent sales pressure, offers a nearly 3% forward dividend yield, holds leading market share in key beverage categories like Modelo and Corona, and maintains a sustainable dividend payout, positioning it as an attractive investment during its current valuation dip.

The Story So Far

The analysis identifies Coca-Cola and Constellation Brands as compelling dividend stock opportunities for long-term investors, primarily due to their robust market positions, consistent dividend payouts, and current favorable valuations. Coca-Cola, a “Dividend King” with 63 consecutive years of increases, is highlighted after a recent stock pullback, while Constellation Brands, despite facing recent sales pressure, is noted for its elevated dividend yield following a significant year-to-date decline and its leading market share in key beverage categories.

Why This Matters

The analysis identifies Coca-Cola and Constellation Brands as compelling dividend stock opportunities for long-term investors, suggesting that recent stock pullbacks, despite some short-term sales pressure for Constellation, offer attractive entry points. This implies that investors looking for resilient consumer brands with strong market positions and a history of consistent shareholder returns could find these companies particularly appealing at their current valuations.

Who Thinks What?

John Ballard of The Motley Fool identifies Coca-Cola as a compelling long-term dividend stock due to its 63-year history of dividend increases, high profitability from a capital-light model, and resilient global brand portfolio.

John Ballard of The Motley Fool also views Constellation Brands as a value opportunity for long-term investors, citing its leading market share in key beverage categories, sustainable dividend payout, and current attractive valuation despite recent sales pressures.

Warren Buffett’s Berkshire Hathaway implicitly supports the investment potential of Constellation Brands, having disclosed a stake in the company.

Two prominent consumer goods companies, Coca-Cola and Constellation Brands, have been identified as compelling dividend stock opportunities for long-term investors, according to an analysis by John Ballard of The Motley Fool published on October 20, 2025. The assessment highlights their robust market positions, consistent dividend payouts, and current valuations as key factors for potential investment.

Coca-Cola’s Enduring Dividend Strength

Coca-Cola, trading under the ticker KO, is noted for its exceptional dividend history, having increased its payout for 63 consecutive years, earning it the designation of a “Dividend King.” The stock’s recent pullback from a 52-week high of $74 to $68.45 as of October 17, 2025, presents a potential buying opportunity.

The company’s business model is characterized by high profitability, generating $12 billion in net income from $47 billion in revenue over the past year. Coca-Cola typically distributes approximately 75% of its earnings as dividends. Its capital-light strategy, where 85% of unit sales come from concentrate syrups sold to bottling partners, contributes to a strong 25% profit margin.

Coca-Cola’s global distribution network and strong brand portfolio provide resilience against economic fluctuations and tariffs, allowing it to pass increased costs to consumers without significant impact on sales volume. The stock trades at nearly 23 times this year’s earnings, offering a forward dividend yield of 3% based on a quarterly payout of $0.51.

Constellation Brands: A Value Opportunity Amidst Sales Pressure

Constellation Brands (STZ) has garnered investor attention, notably after Warren Buffett’s Berkshire Hathaway disclosed a stake in the company in the fourth quarter of 2024. Despite this, the stock has experienced a 37% year-to-date decline, which has elevated its forward dividend yield to nearly 3%.

The company holds U.S. distribution rights for popular Mexican beer brands, including Modelo and Corona, contributing $8.5 billion to its beer sales last year, alongside $1.4 billion from wine and spirits. Constellation Brands has faced recent sales pressure due to a pullback in discretionary consumer spending, resulting in two consecutive quarters of revenue decline and a 15% year-over-year drop in fiscal Q2 ending in August.

Despite the short-term challenges, the company’s guidance projects full-year adjusted net sales to be down between 4% and 6%. Its leading market share in key beverage categories, combined with a sustainable dividend payout ratio of 40% of full-year earnings and ongoing share repurchases, positions it as an attractive investment during its current valuation dip.

Investment Outlook

The analysis suggests that investing in consumer brands with established market positions and strong dividend histories, such as Coca-Cola and Constellation Brands, can significantly enhance long-term investment returns. These companies demonstrate resilience and a commitment to shareholder returns, particularly when market conditions create opportunities for entry at favorable valuations.