Coca-Cola Stock Is Interesting, But Here's What I'd Buy Instead

Coca-Cola (NYSE: KO) just reported full-year 2025 earnings. Organic sales rose 5% for the year, which is pretty strong given the industry headwinds.

That said, the shift toward healthier foods and belt-tightening among consumers led the company to guide for 4% to 5% growth in 2026. Investors weren't pleased, and the stock sold off. There's still a better bargain out there.

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PepsiCo is doing worse

For conservative income investors, Dividend King Coca-Cola is a decent option. With more than six decades of annual dividend increases and a price-to-earnings ratio slightly below its five-year average, the risk/reward balance isn't bad. However, you can do better than Coca-Cola's 2.7% dividend yield with PepsiCo (NASDAQ: PEP).

PepsiCo's yield is 3.4%, and it's also a Dividend King, with more than five decades of annual dividend increases. Like Coca-Cola, PepsiCo is one of the world's largest consumer staples companies. The two companies compete head-to-head in the beverage niche. That said, PepsiCo's organic sales grew just 1.7% in 2025. It's feeling the industry's headwinds to a much greater degree.

PepsiCo offers more

PepsiCo's price-to-earnings ratio is slightly above its five-year average, but its dividend yield is near the high end of its historical range. Backing up the value proposition is the fact that PepsiCo's price-to-sales, price-to-book, and price-to-forward-P/E ratios are all below their five-year averages. The yield is 0.7 percentage points higher than Coca-Cola's yield, which is 25% more income in your pocket.

From a big-picture perspective, PepsiCo looks cheaper than Coca-Cola. There's a reason for that, given the weaker operating performance. However, that's partly because PepsiCo's business extends well beyond beverages, including salty snacks and packaged food products. This diversification is a headwind today, but over the long term, it gives the company more opportunities to grow.

Don't expect a quick turnaround with PepsiCo

In 2026, PepsiCo is projecting organic sales growth of between 2% and 4%. So it'll still trail Coca-Cola for a bit longer, even though PepsiCo's projected organic sales growth range would be an improvement over 2025's results.

However, the higher yield is compensation for the slower organic growth rate. If you think in decades and not days, the turnaround opportunity is more material. PepsiCo's stock remains 15% below its all-time highs, while Coca-Cola's stock price is just a few percentage points off its high-water mark.

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.