Coca-Cola Hasn't Sold Much More Soda in a Decade. Its Dividend Has Gone Up Every Year Anyway.

In 2015, Coca-Cola (NYSE:KO) and its bottling partners (what the company calls the Coca-Cola system) sold 29.2 billion unit cases of its drinks. A unit case is the company's standard volume measure, equal to 24 eight-ounce servings.

In 2025, the system sold 33.8 billion unit cases. In total, the system's volume grew about 16% over those ten years, or about 1.5% a year. And soda is still most of what the company sells: sparkling soft drinks made up 69% of those cases last year.

The dividend hasn't crept along like that. Coca-Cola paid $1.32 per share in 2015 and pays $2.12 today -- an increase of 61%, with a raise in every single year along the way. February's boost of about 4% marked the company's 64th consecutive annual increase.

But if volume barely moves, what has been paying for all those raises?

Image source: The Motley Fool.

Higher margins have funded the raises

Coca-Cola became a different business over those ten years. A decade ago, the company still owned a big chunk of its bottling operations, which kept billions of dollars of low-margin bottling revenue on its books.

Between 2016 and 2018, it handed most of those operations back to independent bottlers (a process the company calls refranchising), keeping the concentrate sales and the brand economics for itself.

The numbers show how much that changed. Revenue was $44.3 billion in 2015. By 2018, with most of the bottling businesses gone, it was down to $31.9 billion -- and by 2025 it had climbed back to $47.9 billion. Operating income, meanwhile, ended that stretch much higher, at $13.8 billion in 2025 versus $8.7 billion a decade earlier. And the company's operating margin expanded to about 29% from about 20% over that stretch.

In other words, Coca-Cola sells barely more product than it did ten years ago, but it keeps a much bigger share of every dollar. I'd argue that shift, more than anything happening in the soda aisle, is what has kept the raises coming.

Price and mix did the rest. Last year, organic revenue grew 5% while global unit case volume was even.

Four points of that growth came from price and mix (higher prices plus shifts in which products sell), and 1 point came from concentrate sales. In short, most of last year's underlying growth came from price and mix rather than from more cases.

Can the streak keep going?

Last year, the dividend cost Coca-Cola $8.8 billion. Free cash flow came in at $5.3 billion, or $11.4 billion excluding a large one-time payment tied to the company's fairlife acquisition.

This year, the numbers look even better. Management expects about $12.4 billion of free cash flow in 2026, and the dividend should cost a little over $9 billion at the new rate, or nearly three-quarters of the expected cash.

On that math, the raises could continue for years to come.

Volume has even picked up lately. In the second quarter, reported in late July, unit case volume grew 5% year over year, an acceleration from 2025, when volume didn't grow at all. Growth came from Trademark Coca-Cola along with water, sports drinks and tea. Revenue rose 7% year over year to $13.4 billion.

Even more, management now expects organic revenue growth of about 5% this year, the high end of its earlier range. CEO Henrique Braun said in the earnings release that the company "leveraged our powerful brands and system to gain value share" -- share of the money spent, not just of the cases sold.

Dependability is already priced in

But the stock already reflects a lot of that dependability. As of this writing, shares trade at about $88, not far from their 52-week high of $92.49.

The stock trades at about 25 times earnings, and the dividend yields 2.4% at the stock's current price.

That's a lot to pay for a business whose underlying growth runs in the mid-single digits. Sure, Coca-Cola has been raising prices for decades, and it can likely keep doing so. But a few points of price and mix a year is already baked into the valuation, not a bonus on top of it.

Ultimately, the streak looks about as safe as dividend streaks get. The company generates more than enough cash to cover the payout, and pricing has done the growing for years now.

But safety and value aren't the same thing. At 25 times earnings and a 2.4% yield, buyers today are paying a premium for the dependability. I think the dividend will keep growing. I just wouldn't pay this price for it.

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.