1 Reason to Hold Coca-Cola Stock for 10 Years

Coca-Cola (KO) shares have surged roughly 35% this year, outpacing the S&P 500's 11% gain. Despite its impressive performance, the most compelling reason to hold the stock for the next decade remains unchanged: Coca-Cola's ability to raise prices without losing customers. In the most recent quarter, the company's price hikes contributed about four percentage points to sales growth, while unit case volume still increased by 5% year-over-year.

Over the past half-century, Coca-Cola's annual volume has only declined once, during the pandemic, and Kantar has ranked it as the world's most valuable food and beverage brand.

Management's long-term strategy involves balancing unit volume growth with price increases. Over a decade, this steady combination can compound earnings and dividends. Coca-Cola's strong brand power doesn't guarantee smooth growth, however. Management recently noted that cost pressures have intensified and expects consumer concerns about value to remain significant by 2027.

If the company cannot raise prices sufficiently to offset rising costs, margins could decline, and its pricing power may appear weaker. Nevertheless, patient investors are rewarded. Coca-Cola currently yields about 2.2%, roughly twice the yield of the S&P 500, and it has increased its dividend for 64 consecutive years. With the fourth-quarter results and the first 2027 guidance expected in February, investors will soon determine whether Coca-Cola's pricing power will persist into the next year.