Coca-Cola's Dividend Yield Has Fallen to 2.4% From 2.9% at the Start of 2026. Is the Stock Still a Buy?

Coca-Cola (NYSE:KO) has done everything an income investor could ask of it this year. In February, the company raised its quarterly dividend about 4% to $0.53 per share ($2.12 a year), marking its 64th consecutive annual increase. Its business has delivered, too, with results strong enough that management raised its full-year outlook in late July.

The stock has responded. Shares have climbed about 28% in 2026, reaching about $90 as of this writing -- within a few dollars of their 52-week high.

And that is exactly the problem for anyone buying today for the income. A dividend yield is a ratio, and this year the price ran far ahead of the payout.

At the start of January, Coca-Cola stock yielded about 2.9%. Today, even with the higher payout, it yields about 2.4%.

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The raise didn't keep up with the run

The math is simple enough. Coca-Cola entered the year trading near $70 with an annual dividend rate of $2.04, which worked out to a yield of about 2.9%. Since then, the dividend has grown 4%, and the stock price has grown about 28%.

Divide the new payout by the new price, and the yield lands at about 2.4%.

Within the past year, the compression looks even sharper. The stock's 52-week low is $65.35, and a buyer at that price collects more than 3.2% on today's payout.

A buyer at $90, by contrast, collects about a quarter less income on every dollar invested.

For a stock investors mostly own for its steadily growing income stream, that is a meaningful change in what a new dollar buys. The payout keeps rising on schedule. The price of a dollar of that payout has simply risen much faster.

The business earned the rally

To be fair, the stock hasn't climbed on nothing. In the second quarter of 2026, Coca-Cola's net revenue rose 7% year over year to $13.4 billion, and organic revenue grew 6% on a 4% increase in concentrate sales and 2% growth from pricing and mix (a higher share of sales coming from better-priced products).

Furthermore, global unit case volume grew 5%. Comparable operating margin reached 35.6%, an expansion from 34.7% a year earlier. Management also lifted its outlook, and now expects organic revenue growth of about 5% for the full year, up from its earlier forecast of 4% to 5%. The company expects to produce about $12.4 billion of free cash flow this year, too.

Those are excellent numbers for a company of Coca-Cola's size and maturity, and they explain the market's enthusiasm. The dividend itself also remains well supported. The $2.12 annual payout consumes about 64% of the company's trailing earnings per share -- coverage comfortable enough that the streak of increases looks in no danger.

The trouble is what the price now assumes. The stock carries a forward price-to-earnings ratio of about 26, for a company guiding to about 5% organic revenue growth.

That is arguably a premium valuation for consistency, and the lower yield is where that premium shows up.

What closes the gap?

There are only two ways the yield returns to where it started the year: The price comes down, or the dividend catches up.

The dividend route is slow. At the current pace of about 4% annual raises, the payout would need roughly five years of increases (reaching about $2.58) to put the yield back near 2.9% with the stock at $90. That is five years of dividend growth spent just recovering the income the price move took away.

Getting there on price instead is faster but less pleasant. Restoring a 2.9% yield on the current $2.12 payout requires a price near $73 -- about 19% below where shares trade today.

Neither is a forecast, and I'm not predicting a 19% decline. The point is narrower. Buyers at today's price collect noticeably less than the stock offered as recently as January, so the return from here depends more on the stock continuing to climb than income investors may realize.

However, I still think Coca-Cola is one of the most dependable dividend payers in the market. And for investors who already own the stock, a 28% gain plus a raised payout is a fine year -- selling wouldn't be my move. But I wouldn't put new money into the dividend stock at this yield, either. For income buyers, patience seems like the better play. Either the dividend grows into today's price over time, or the market offers a better entry somewhere along the way.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.