This Warren Buffett Stock Is Beating the S&P 500 in 2026

It's true that Warren Buffett has finally retired and isn't running the ship at Berkshire Hathaway these days. That said, Buffett's legend and his investing philosophies are still part of the company's DNA. Coca-Cola (NYSE: KO) is one of Buffett's favorite companies, and Coca-Cola stock still sits in Berkshire's famous portfolio today.

Do investors need to load up on technology companies or high-octane growth stocks to enjoy strong investment returns? Not at all. Coca-Cola may be a slow-and-steady stock, a Dividend King (a company that has annually raised its dividend payout for 50 years or more), known more for its reliable dividend than explosive share price action. Yet, Coca-Cola has outperformed the S&P 500 (SNPINDEX: ^GSPC) in 2026.

Here's what you need to know about Coca-Cola's success and whether you should still buy shares now.

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Consistency has been key for Coca-Cola stock

The proof is in the pudding. Coca-Cola has returned more than 12% since January, outpacing the broader market by nearly a percentage point. The secret behind Coca-Cola's steady performance is the same as what makes it an excellent dividend stock: consistency.

Coca-Cola is one of the few businesses that sells something virtually everyone knows and consumes, whether it's classic Coca-Cola or any of its various brands of sodas, water, juices, coffee, or other prepared beverages. Coca-Cola also has various ways to increase its top and bottom lines each year. It can raise prices, acquire or develop new brands, or simply sell more servings as the global population rises over time.

KO Total Return Price data by YCharts

People get thirsty regardless of the economy, so Coca-Cola is generally recession-proof. It's not hard to see why Buffett bought the stock decades ago and held it in Berkshire Hathaway's portfolio ever since.

And so is the price you buy it at

There's always a catch, and Coca-Cola's is its slow-and-steady growth. Analysts currently estimate that Coca-Cola will grow its earnings per share by an average of 7% to 8% annually over the next three to five years. Therefore, it's crucial that investors buy the stock at a valuation that makes sense for that growth rate.

Coca-Cola is trading at nearly 25 times its earnings per share over the past 12 months. At a PEG ratio over 3.0, that's a little rich for the growth you're getting. Investors often pay a premium for quality, and Coca-Cola is certainly a blue chip dividend stock. But that P/E ratio was closer to 22 in the fall, which still wouldn't have been a bargain, but it's a bit more digestible than the current price tag.

Investors who want to buy the stock and improve their chances at market-beating returns should target a lower valuation. A P/E of around 20 times earnings, a valuation that reflects the company's quality, would leave a bit more room for the stock to appreciate as earnings grow. That would be about $65 per share, based on 2026 earnings estimates. It's probably wise to wait it out for a better opportunity before hitting that buy button.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.