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

There are two big shifts taking place among consumers when it comes to consumer staples makers. First, cost pressures are forcing people to tighten their budgets. Second, there is a trend toward healthier eating. Both of these factors have put pressure on Coca-Cola's (NYSE: KO) stock.

That presents an opportunity for long-term investors focused on dividend-growth stocks. Here's what you need to know.

What does Coca-Cola do?

From a top-level view, Coca-Cola is a consumer staples company. As noted, the entire consumer staples sector is out of favor right now. Over the past three years, the S&P 500 index has traded up 70% while the average consumer staples stock has risen just about 19%. Shares of Coca-Cola have basically tracked the consumer staples sector. Investors are clearly favoring other investments, like artificial intelligence (AI) stocks.

Image source: Getty Images.

When you dig into Coca-Cola's business in more detail, you'll see it is a beverage maker. That's an interesting subset of the food sector, where consumers are basically just buying expensive, fancy water. Coca-Cola is the largest beverage company in the world and, at the same time, one of the world's largest consumer staples companies.

Coca-Cola is, without question, an industry giant. It has distribution, marketing, advertising, and innovation skills that rival any of its consumer staples peers. It also has a dividend history second only to that of its consumer staples peer Procter & Gamble (NYSE: PG). Indeed, Coca-Cola's resilience and capacity for growth are highlighted by its status as a Dividend King, with over six decades of annual dividend increases behind it.

If you are looking for dividend growth stocks, Coca-Cola should be high on your list. Notably, its dividend yield is 2.8%, which is far above the paltry 1.1% on offer from the S&P 500 index and a touch higher than the average consumer staples yield of 2.3%. That's not the only reason to like Coca-Cola.

Coca-Cola: A fair price for a great business

The interesting thing about Coca-Cola right now is that it continues to perform relatively well despite the broader industry headwinds. For example, organic revenue grew 6% in the third quarter of 2025 with volume up 1%. In other words, despite the shift toward healthier eating habits, Coca-Cola continues to find ways to grow. That's not actually a shock; the company has a long history of adjusting to shifting consumer preferences.

However, Wall Street appears to be throwing the baby out with the bathwater in the consumer staples sector. Coca-Cola's price-to-earnings ratio and price-to-book value ratio are both below their five-year averages. The stock's price-to-sales ratio is roughly in line with the longer-term average. Coca-Cola isn't trading at a deep discount, but a fair to slightly cheap price for this industry-leading business is likely to be a very attractive option for most investors.

On the dividend side, Coca-Cola's yield is attractive relative to the market and the rest of the consumer staples sector. However, the yield is just middle-of-the-road compared to the company's own history. Like the more traditional valuation metrics, this suggests that investors buying today would be getting a fair price.

Buy while you have the opportunity

It is entirely possible that Coca-Cola's business slows down and the stock falls from here. However, history suggests that this Dividend King will survive the current headwinds in relative stride and, over the long term, continue to thrive as a business. If you think in decades and not days, getting in a little early is likely to be a winning move. With $1,000, you can get your foot in the door with roughly 13 shares of this reliable dividend growth stock.

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