The Ultimate Dividend Growth Stock to Buy With $1,000 Right Now

How much are you willing to pay for a good company? That's not an idle question, because if you pay too much, you can turn a good company into a bad investment.

At the same time, however, good companies don't often go on sale. For conservative long-term investors, a fair price for a good company is usually a sign to buy. That is why you'll probably want to invest $1,000 in this iconic consumer staples company.

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What will $1,000 get you?

A $1,000 investment in Coca-Cola (NYSE: KO) will buy you roughly 14 shares. Fourteen shares isn't the right way to think about it. What you are really buying is partial ownership in the company. It doesn't matter if it is one share or 1 million shares; you want to make sure that what you are buying is worth buying. In the case of Coca-Cola, it is very likely.

Coca-Cola is the world's most important non-alcoholic beverage maker. That's a niche of the broader consumer staples sector. From a big-picture perspective, Coca-Cola is essentially selling expensive flavored water. Consumers could just as easily drink tap water and save themselves some money. However, the drinks that Coca-Cola sells are affordable luxuries, so customers tend to keep buying them even during difficult times.

That, in fact, is a key feature of the consumer staples sector. Companies like Coca-Cola sell products that are reasonably priced and bought regularly, regardless of economic and stock market events. Moreover, a significant amount of brand loyalty is involved, with consumers simply preferring their chosen brands and sticking to them through thick and thin.

The consistency of Coca-Cola's business is underscored by its status as a Dividend King, boasting more than six decades of consecutive annual dividend increases. That importance of the company, and its bona fides in the consumer staples sector, are highlighted by the fact that it is the fourth largest consumer staples company on Earth. It stands toe-to-toe with any peer when it comes to brand strength, marketing prowess, distribution capabilities, and innovation chops.

Coca-Cola is a slow and steady dividend growth machine, but that can be a powerful combination when you buy and hold for the long term. And now looks like an attractive time to consider buying this industry-leading beverage company.

Coca-Cola: A fair price for a strong business

The consumer staples sector is facing some headwinds today, which has investors downbeat on the entire sector. Buying habits that could shift due to GLP-1 weight loss drugs, a general trend toward healthier products, and consumers tightening their belts in the face of rising prices are all notable issues. Broadly speaking, consumer staples makers will adjust over time.

That said, Coca-Cola is actually doing relatively well compared to its peers. It managed to increase organic sales 6% in the third quarter of 2025, compared to a 1.3% increase for key competitor PepsiCo (NASDAQ: PEP). Notably, Coca-Cola's same-store sales rose from the second quarter while PepsiCo's fell. Simply put, Coca-Cola is doing very well despite the broader industry headwinds.

The best part of the story, however, is that Coca-Cola's valuation is attractive. Its price-to-sales ratio is roughly in line with its five-year average. However, the price-to-earnings and the price-to-book value ratios are both below their five-year averages. One valuation tool usually isn't enough; you need to look at several tools to get a feel for a stock's valuation. In this case, a reasonable to cheap price looks like the big takeaway.

"Ultimate" is in the eye of the beholder

Whether or not you consider Coca-Cola the ultimate dividend growth stock depends largely on your personal investment approach. However, a great company at a fair price is hard to ignore. And now add in the 2.9% dividend yield, which is more than twice the 1.1% yield of the S&P 500 index (SNPINDEX: ^GSPC) and also above the 2.7% yield of the average consumer staples stock. For long-term dividend investors, Coca-Cola could easily be the ultimate dividend growth buy today.

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