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

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

investing ideas :: 11hrs ago :: source - motley fool

By Daniel Foelber

With 64 consecutive years of increasing its dividend and a 2.6% yield, Coca-Cola (NYSE: KO) is one of the most reliable ways to participate in the stock market while collecting passive income. But Coke's dividend has played a supporting role in recent years.

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The real star of the show has been its soaring stock price. Coke jumped 12.3% in 2025 and is already up 14.2% year to date -- crushing the S&P 500's (SNPINDEX: ^GSPC) 0.9% return.

Coke remains one of the most intriguing dividend stocks to buy now. But I think Campbell's (NASDAQ: CPB) is a far better buy. Here's why.

Image source: Getty Images.

Campbell's is more than just a soup company

Campbell's is known for its flagship soup label, but it also owns several meal and snack brands, from Prego, Rao's Homemade, Pace, and V8 to Goldfish, Lance, Snyder's of Hanover, Pepperidge Farm, Cape Cod, and Kettle. The company has been diversifying its revenue stream by relying less on salty meals and snacks, with brands and product versions specially catered to health-conscious consumers.

Coke faces the same challenge, given its heavy reliance on Coca-Cola and other sodas. In 2025, 69% of Coke's worldwide case volume was soft drinks. Meanwhile, its trademark cola accounted for 42% of U.S. unit case volume and 48% of non-U.S. unit case volume.

Lower-calorie and sugar-free versions of Coke continue to perform well, but the company is still heavily reliant on one brand, leaving it vulnerable to changing consumer preferences.

Still, Coke's results speak for themselves, as the company has done a masterful job of maintaining organic growth and ultra-high margins thanks to its elite supply chain, distributed bottling network, and unmatched global brand recognition.

A better value with a higher yield

Coca-Cola deserves a premium valuation, but Campbell's is simply too deep in the bargain bin to ignore.

Campbell's fetches a mere 11.1 forward price-to-earnings ratio compared to 24.7 for Coke.

CPB PE Ratio (10y Median) data by YCharts

Unlike Coke, Campbell's has struggled to pass along costs to consumers. But it is still generating ample free cash flow and earnings to cover its dividend. In fact, Campbell's has a similar payout ratio to Coke and better free-cash-flow conversion over the trailing 12 months.

CPB Free Cash Flow Per Share data by YCharts

Campbell's doesn't have Coke's elite track record of boosting its payout, but it has maintained or raised its dividend every year since 2002. And it yields 5.8% -- which is substantially more than Coke.

Campbell's is the better income stock

Coke remains an ultra-reliable dividend stock, but the stock price has increased at a far faster rate in recent years than its earnings, which has inflated its valuation. By comparison, Campbell's is deeply discounted even though its dividend expense is manageable.

All told, Campbell's is the better buy for income investors looking to give their passive income stream a jolt.

Should you buy stock in Campbell's right now?

Before you buy stock in Campbell's, consider this:

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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy.

This article was originally published by The Motley Fool