You Can Do Better Than Coca-Cola Stock. Buy This High-Yield Dividend Stock Instead.
2026-07-23 11:25
•Justin Pope •The Motley Fool
•••• •• Axe Capital view
Look Beyond Coca-Cola: Better Dividend Value on Offer
Coca-Cola’s rich valuation dampens its allure, while some high-yield REITs show more attractive income potential.
Coca-Cola’s long streak of dividend hikes is impressive, but paying 25 times forward earnings for that stability feels pricey today. South African income hunters might take note, even if KO isn’t on our local exchange. The takeaway? Look for dividend payers with strong yields and more reasonable valuations. Realty Income, a US REIT, offers close to 5% yield, monthly payouts, and a payout ratio that leaves room for growth—an attractive setup when bonds yield less than that in rand terms. While it doesn’t trade on the JSE, its USD/ZAR-denominated returns are worth watching, especially as rand weakness can enhance dollar-based dividend receipts. Locally, banks like Standard Bank and FirstRand pay solid dividends but trade closer to their fair value. Patience is key in waiting for better entry points or dividend yield premiums. If the rand strengthens sharply or global REITs face economic shocks, this preference for yieldier names could falter. this is just my opinion and not financial advice
I would trim overpriced defensive stocks like Naspers and Coca-Cola-exposed assets, while selectively adding high-yield US REITs via ETFs or ADRs, keeping a hedged eye on USD/ZAR. On the JSE, watch for pullbacks in financials and consumer staples before buying.
- USD/ZAR
- Standard Bank
- FirstRand
- Naspers
- rand strength reducing dollar dividend value
- global interest rate shocks hitting REIT valuations
6/10
While Coca-Cola is a reliable dividend stock with 64 consecutive annual dividend hikes, its current valuation of 25 times 2026 earnings is too expensive. Realty Income, a top REIT, offers a better alternative with nearly double the dividend yield (4.98%), monthly payouts, 31 consecutive years of dividend increases, and a more reasonable valuation at less than 15 times 2026 funds from operations.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Justin Pope
Categories: Rates, Equities, Earnings, Capital Returns
Tickers: KO, O
Sentiment: Mixed - Stock is overvalued at 25 times 2026 earnings estimates despite strong dividend history of 64 consecutive annual hikes. The article suggests investors can find better opportunities elsewhere at more reasonable valuations. Presented as a superior alternative with nearly double the dividend yield (4.98%), monthly payouts, 31 consecutive years of dividend growth, strong fundamentals with only 73% payout ratio, and attractive valuation at less than 15 times 2026 FFO guidance.
Keywords: dividend stocks, REITs, valuation, dividend yield, income investing, real estate investment trusts
Insights:
- KO: Negative: Stock is overvalued at 25 times 2026 earnings estimates despite strong dividend history of 64 consecutive annual hikes. The article suggests investors can find better opportunities elsewhere at more reasonable valuations.
- O: Positive: Presented as a superior alternative with nearly double the dividend yield (4.98%), monthly payouts, 31 consecutive years of dividend growth, strong fundamentals with only 73% payout ratio, and attractive valuation at less than 15 times 2026 FFO guidance.