Smart Dividend Portfolio Edition #93: Fizzy Returns
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Dear Investor,
Welcome to the 93rd edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: Dec 29, 2025
U.S. markets ended the holiday week mostly unchanged after touching new highs. A broad rally in metals, strength in AI-related chipmakers, and steady economic data helped keep sentiment upbeat. The S&P 500 (SPX) dipped 0.03% to 6,929, the Nasdaq 100 (NDX) lost 0.09%, and the Dow Jones Industrial Average (DJIA) slid 0.04%. However, the S&P 500 posted its 39th record close of the year in the prior session, though it broke a five-day winning streak this week.
The 10-year Treasury yield rose slightly to 4.17%, while the Federal Funds Rate slipped to 3.88%. Inflation ticked lower to 2.74%, and real GDP growth was last reported at 4.3%. Oil dropped 2.4% to $57.06 per barrel, but gold and silver surged to new records.
Metals were the big story this week. Gold (XAUUSD) rose 1.3% to $4,536, and silver (XAGUSD) jumped over 11% to $79.45, both reaching new all-time highs. Copper gained 5%, helped by global supply risks and industrial demand. The move sparked gains in metal producers, including Freeport-McMoRan (FCX) and Southern Copper (SCCO).
Traders pointed to lower rates, a weaker dollar, and rising geopolitical tension as reasons behind the gold rally. Investors also looked for safety amid thin holiday trading and signs that mining supply remains tight heading into 2026.
AI stocks got fresh attention after Nvidia (NVDA) signed a major licensing agreement with AI chip startup Groq. The deal gives Nvidia access to Groq’s low-latency inference chips and brings key Groq executives into the company. Groq’s chips are optimized for language models and offer faster processing with lower power use compared to traditional GPUs.
The companies did not confirm an acquisition, which may help avoid antitrust scrutiny. However, analysts widely see it as a major acqui-hire. Nvidia plans to add the Groq technology into its AI factory architecture to extend its leadership in inference workloads.
The move came as memory stocks also stayed in focus. Micron Technology (MU) remains near its highs after reports from South Korea showed its competitors are raising prices on high-bandwidth memory chips. Wedbush said server and memory demand are both tracking ahead of seasonal trends.
Markets will close out 2025 with light volume and a close watch on catalysts. Eyes will be on follow-up moves from the Nvidia–Groq agreement, possible updates around drug pricing deals, and signals from Fed speakers around early 2026 rate guidance.
Commodities could stay in focus as metals and miners attract new flows, while AI chipmakers and hyperscaler capex trends remain a key driver of sentiment as the new year dawns.
Analysts see potential for a Santa Claus rally to push markets higher into year-end, though gains may depend on data and headlines. Many investors are looking for a positive setup in January, with macro conditions turning more supportive and earnings season just around the corner.
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This Week’s Quality Dividend Stock Idea
The Coca-Cola Co. (KO) is the world’s largest non-alcoholic beverage company, with products sold in more than 200 countries and territories. The company focuses on brand ownership, marketing, and global system management rather than direct manufacturing, with its portfolio anchored by the Coca-Cola trademark and spanning a broad range of non-alcoholic beverages.
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Bottled Origins
The Coca-Cola Co. traces its origins to 1886, when Atlanta pharmacist John Stith Pemberton created a syrup that was initially sold as a fountain drink. In the 1890s, Asa Candler acquired the formula and drove early expansion by franchising bottling rights, establishing a scalable structure that enabled rapid growth while keeping capital intensity relatively low. This franchised system laid the foundation for Coca-Cola’s enduring economic model.
During the first half of the 20th century, Coca-Cola evolved from a domestic brand into a global consumer franchise. International expansion accelerated during World War II, when the company supplied beverages to U.S. troops overseas, seeding long-term demand across Europe, Asia, and Latin America. In the postwar period, Coca-Cola invested in local bottling partnerships and marketing, supporting sustained volume growth and reinforcing pricing power. By the 1960s, the introduction of brands such as Sprite and Fanta broadened the portfolio beyond cola, reducing product concentration risk.
From the 1980s through the early 2000s, Coca-Cola expanded into adjacent beverage categories as carbonated soft drink consumption matured in developed markets. Acquisitions including Minute Maid, Powerade, and Glacéau (Vitaminwater) extended the portfolio into juices, sports drinks, and enhanced beverages, while the company increasingly emphasized brand ownership, marketing, and its concentrate-based model to support returns on invested capital.
This strategic focus sharpened in the mid-2010s. Coca-Cola deepened its partnership with Monster Beverage in 2014–2015, raising its ownership stake to roughly 19% and securing global distribution rights in energy drinks. At the same time, management launched a large-scale global refranchising initiative, systematically transferring company-owned bottling operations back to partners. Targeted acquisitions such as Topo Chico in 2017 complemented this transition. The 2018 acquisition of Costa Coffee added more than 4,000 outlets and created a global coffee platform, but ongoing underperformance has led Coca-Cola to reassess the business, including exploring strategic options with Lazard.
Coca-Cola also completed the full acquisition of Chi Limited in Nigeria by 2019 and made minority investments in brands such as BodyArmor to expand its presence in sports and hydration beverages. More recently, the company has moved toward completing its decade-long refranchising journey. The sale of its remaining stake in Hindustan Coca-Cola Beverages, the transfer of control in Coca-Cola Beverages Africa, and the divestiture of its interest in Coca-Cola Consolidated underscore a decisive exit from capital-intensive bottling assets.
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Cola Blueprint
The Coca-Cola Company operates a brand-centric beverage system designed to deliver consistent earnings and cash generation across economic cycles. The company owns and manages a portfolio of some of the world’s most valuable beverage trademarks, while relying on a global network of bottling partners to manufacture, package, and distribute finished products. This structure allows Coca-Cola to concentrate both its capital and management’s focus on brand building, pricing strategy, innovation, and system economics rather than asset-heavy logistics.
The company generates most of its revenue by selling beverage concentrates, syrups, and bases to bottlers, who subsequently sell finished products to retailers and foodservice customers. These concentrate sales carry structurally high margins because they require limited raw materials and capital investment relative to finished beverages. In select markets, Coca-Cola operates finished product businesses, but over time, it has deliberately refranchised many bottling operations to reduce asset intensity and improve returns on invested capital. The company also earns equity income from strategic stakes in key bottlers, aligning incentives across the system while preserving balance-sheet flexibility.
The business is supported by a broad and diversified beverage portfolio spanning sparkling soft drinks, water, sports drinks, juices, dairy, coffee, and tea. This diversification reduces reliance on any single category and allows Coca-Cola to adapt to shifting consumer preferences without altering its underlying operating model. Strong brand equity, global scale, and disciplined revenue growth management underpin pricing power, enabling the company to offset input cost inflation through price and mix while sustaining demand across income levels and geographies.
Execution is guided by a strategy built around strengthening the brand portfolio, accelerating innovation, and fully leveraging the global franchise system. Coca-Cola manages 30 billion-dollar brands, providing a wide base of established, cash-generating franchises that support consistent reinvestment in marketing, innovation, and system capabilities. Innovation balances global scale with local relevance, allowing the company to tailor products and marketing to regional preferences while deploying them efficiently across its network. Marketing execution is increasingly digital and data-driven, improving targeting, speed, and returns on marketing spend.
Technology, including artificial intelligence, is becoming more central across the organization. AI is used to improve innovation success rates, enhance marketing effectiveness, and strengthen in-store execution through data-driven insights, while also supporting productivity and decision-making across the enterprise.
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Beyond Bubbles
Coca-Cola described the consumer environment over the near term as uneven but broadly stable, with demand holding up better than many discretionary categories. Lower-income consumers remain under pressure from inflation and external disruptions, though third-quarter trends improved late in the period due to stronger marketing, execution, and affordability initiatives. Looking ahead, pricing is expected to moderate, with volume playing a larger role in growth.
Within this framework, Coca-Cola’s dairy business has emerged as a strategically important growth platform, centered on Fairlife and Core Power in the U.S. and Santa Clara in Mexico. Together, these brands make Coca-Cola the largest player in value-added dairy in both markets, a category that focuses on higher-margin products such as ultra-filtered milk and protein beverages rather than traditional commoditized milk.
The strength of the portfolio lies in clear product differentiation. Fairlife and Core Power are built on years of R&D, proprietary filtration processes, and specialized agricultural practices that improve taste, nutrition, and consistency. These capabilities, combined with strong brand marketing, create a high barrier to entry. While protein and functional dairy are attracting more competitors, replicating the product quality, supply chain, and scale of these brands is difficult, giving Coca-Cola a defensible competitive moat.
Demand for these products currently exceeds available supply, limiting distribution and keeping the business on allocation. To address this, Coca-Cola plans to increase capacity by roughly 30% in 2026. This expansion is a key catalyst, as it should allow the company to broaden distribution, introduce new flavors and packaging formats, and expand into adjacent protein subcategories, including single-serve offerings for gyms and on-the-go consumption. These changes also create favorable mix opportunities, supporting both volume and margin growth.
Internationally, management is prioritizing the U.S. and Mexico in the near term, where it controls the production ecosystem, while pursuing a more selective, tailored approach in other regions.
Coca-Cola’s organizational culture emphasizes discipline, adaptability, and long-term continuity. Post-COVID restructuring has streamlined operations and improved focus, while board-led succession planning reinforces stability across leadership transitions. In line with this approach, the board has named COO Henrique Braun to succeed James Quincey as CEO on March 31, 2026, with Quincey transitioning to executive chairman and Braun set to stand for election to the board at the 2026 annual meeting.
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Mix Matters
Over the past three years, Coca-Cola has delivered steady financial progress, with revenues and EPS growing at compound annual rates of 4% and 9.8%, respectively. Performance has been driven primarily by pricing and product-mix gains that offset uneven volume trends and ongoing currency headwinds. Organic revenue growth has been stronger, supported by disciplined pricing, portfolio expansion into low-sugar and functional beverages, and selective volume growth in emerging markets. Earnings benefited from cost control and operating leverage, although foreign exchange and one-time items remained a drag.
The company posted a solid third-quarter performance, reflecting balanced revenue growth and continued operating discipline. Net revenues increased 5% year over year to $12.5 billion, while organic revenue rose 6%, driven entirely by price and mix. Unit-case volume increased 1%, with pricing contributing roughly four points from earlier inflation-related actions and mix adding about two points as consumers gravitated toward higher-value offerings. Adjusted EPS rose 6% to $0.82, exceeding consensus expectations. Comparable gross margin declined modestly by 10 basis points due to cost and mix pressures, but comparable operating margin expanded by 120 basis points. Management attributed the margin expansion to sustained productivity initiatives rather than short-term cost reductions. CFO John Murphy pointed to supply chain efficiencies, more effective advertising spending, and disciplined expense management, which helped offset currency headwinds, fund reinvestment, and still expand profitability.
Regionally, results reflected stabilization alongside selective growth. In North America, volumes were flat but improved sequentially, with share gains led by Coca-Cola Zero Sugar and Diet Coke, supported by targeted innovations such as Retro Diet Coke packaging and stronger in-market execution, including expanded cold-drink availability. Latin America volumes were also flat, as share gains offset macro pressure. Brazil continued to deliver solid growth, particularly in Coke Zero Sugar, while softer trends in Mexico prompted management-led interventions. Santa Clara remained the leading value-added dairy brand in the region.
In EMEA, volumes grew overall, with strength in Eurasia, the Middle East, and Africa offsetting declines in Europe due to tougher comparisons. Marketing partnerships, including the English Premier League and the Springboks, supported brand visibility. Asia Pacific volumes declined amid adverse weather and cautious consumer spending, though Coca-Cola gained share through sharper execution and a focus on affordability. Management emphasized that the region’s 7% organic revenue growth reflected mix volatility.
Coca-Cola exited the quarter with a strong balance sheet, reporting net debt leverage of 1.8 times EBITDA, below its targeted range of 2.0 to 2.5 times. Adjusted free cash flow reached $8.5 billion year to date, excluding the Fairlife contingent consideration payment1, highlighting Coca-Cola’s resilient cash generation.
Management reaffirmed its outlook, maintaining expectations for 2025 organic revenue growth of 5% to 6% and comparable currency-neutral EPS growth of approximately 8%. For the full year, the company continues to expect currency headwinds of 1% to 2% on net revenues and about 5% on EPS, while projecting free cash flow of at least $9.8 billion, excluding the Fairlife payment.
Looking ahead to 2026, Coca-Cola did not provide formal guidance but outlined several important considerations. A calendar shift will affect quarterly comparisons, with six additional days in the first quarter and six fewer days in the fourth quarter, altering the cadence of reported growth. Strategically, management expects volume to become a more important driver as inflation continues to moderate and pricing normalizes. While some commodity cost inflation is anticipated, the overall impact is viewed as manageable, with productivity gains and restructuring efforts helping to offset cost pressures and fund continued investment in growth.
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1-Coca-Cola made a $6.1 billion Fairlife contingent consideration payment in March 2025, the final earn-out tied to Fairlife’s post-acquisition performance, following prior remeasurements such as a $765 million charge, which materially weighed on Q1 2025 cash flows despite Fairlife’s strong outperformance. CFO John Murphy confirmed this was the last payment, and excluding the one-time impact, free cash flow remained solid at $3.9 billion through Q2 and $8.5 billion through Q3 2025.
Dividend Fizz
Coca-Cola’s shareholder return profile is anchored by a long, consistent dividend track record. The company has paid dividends for more than six decades, earning its status as a Dividend Aristocrat, and over the past 10 years, it has grown its dividend at an average annual rate of 4.56%. Based on adjusted earnings, Coca-Cola returns roughly 69% of profits to shareholders, reflecting a mature, cash-generative business model. At a dividend yield of about 2.92%, the stock offers income that is modestly above the consumer defensive sector average of 2.57%, reinforcing its appeal to income-oriented investors.
In addition to dividends, Coca-Cola supplements shareholder returns through share repurchases. In 2019, its Board authorized a program to buy back up to 150 million shares, under which the company has repurchased 18 million shares for approximately $1.1 billion over the first nine months of 2025, supporting per-share value over time.
Over the past year, Coca-Cola’s stock has climbed about 13%, supported by a steady pattern of earnings beats, resilient organic revenue growth, and its appeal as a defensive holding during periods of economic uncertainty. Importantly, this price appreciation has not pushed the valuation into stretched territory. On non-GAAP trailing and forward price-to-earnings (P/E) and EV/EBITDA measures, KO continues to trade at a modest discount to its own historical averages, suggesting investors are not overpaying for its earnings or cash-flow profile.
Relative to peers such as PepsiCo and Keurig Dr Pepper, however, Coca-Cola screens at the moderate-to-high end of the valuation range. Higher non-GAAP trailing and forward P/E and EV/EBITDA multiples indicate the market is assigning a premium for KO’s scale, brand strength, and earnings stability, while the forward PEG ratio reflects expectations for steady, but not aggressive growth. For investors, this implies a balance between valuation discipline and the perceived safety and consistency of Coca-Cola’s business model.
Analysts remain bullish on Coca-Cola’s stock following a largely anticipated leadership transition that is expected to preserve strategic continuity and limit execution risk as the company continues its evolution into a total beverage business. This confidence has been reinforced by a solid third-quarter performance, with results exceeding expectations and underscoring the resilience of Coca-Cola’s operating model.
From a valuation perspective, the upside case remains intact. Street consensus points to roughly 14% potential upside from current share levels, reflecting expectations for steady earnings growth and durable cash flows. More optimistic forecasts see the stock appreciating by as much as 22%. This view is supported by discounted cash flow analysis, which suggests Coca-Cola shares may be trading at an estimated 22% discount to their intrinsic value.
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Investing Takeaway
For income-focused investors, Coca-Cola stands out as a durable compounder built to deliver reliable cash returns across economic cycles. Its asset-light, brand-driven model consistently converts global demand into predictable cash generation, supporting a long history of uninterrupted and steadily rising dividends. The company’s pricing power, diversified beverage portfolio, and disciplined cost structure help protect margins even during periods of inflation, currency volatility, or uneven consumer spending. Importantly, Coca-Cola’s dividend is not dependent on aggressive growth assumptions but is underpinned by recurring concentrate revenues, strong free cash flow, and conservative capital allocation. Ongoing productivity initiatives and portfolio shifts toward higher-value categories further strengthen cash durability. While the stock may not offer explosive upside, it provides income investors with stability, visibility, and resilience, making it well suited for portfolios seeking dependable yield, capital preservation, and long-term compounding rather than cyclical or speculative returns.
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Dividend Investor Portfolio
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Portfolio News
▣ Amgen (AMGN) announced a partnership with the U.S. government aimed at lowering the cost of medicines for American patients. The initiative aligns the company with ongoing federal pricing reform efforts and expands its direct-to-patient AmgenNow program, which provides select medications at reduced prices. Management positioned the move as part of a broader strategy to improve access and affordability while maintaining incentives for innovation. By working directly with policymakers and scaling its patient access platform, Amgen is seeking to balance pricing pressure with long-term demand and trust in its portfolio, a dynamic that remains closely watched by investors amid continued scrutiny of drug pricing.
▣ Honeywell (HON) provided investors with greater visibility into its financial outlook following supplemental disclosures related to its planned 2026 segment realignment. As part of this transition, the company confirmed that its Advanced Materials business will be classified as discontinued operations beginning in the fourth quarter of 2025, resulting in technical revisions to both full-year and quarterly guidance. Separately, Honeywell disclosed it expects to record a one-time charge of approximately $470 million in the fourth quarter of 2025 related to a potential settlement with Flexjet.
At the midpoint, Honeywell now forecasts full-year 2025 adjusted sales of $37.6 billion, adjusted earnings per share of $9.75, and free cash flow of $5.0 billion. For the fourth quarter, adjusted sales are projected at $9.9 billion, modestly below consensus expectations, while adjusted EPS of $2.53 at the midpoint is broadly in line with estimates.
▣ Kroger (KR) strengthened its capital return strategy after its Board of Directors approved an incremental $2.0 billion share repurchase authorization, increasing the company’s total remaining buyback capacity to approximately $2.9 billion. The expanded authorization underscores management’s confidence in Kroger’s ability to consistently generate free cash flow while maintaining a solid balance sheet. The company indicated that repurchases will be funded through a combination of ongoing operating cash flows and existing liquidity, allowing Kroger to return capital to shareholders without compromising financial flexibility.
▣ Lockheed Martin (LMT) received a significant boost to its defense backlog after the U.S. Department of Defense approved a $10 billion expansion to the company’s C-130J Super Hercules aircraft contract. The modification raises the total value of the long-running program to approximately $25 billion and reflects sustained global demand for the tactical airlift platform. The expanded contract supports additional international aircraft deliveries, as well as related engineering, logistics, and program management services. The award reinforces Lockheed Martin’s position as a key supplier to the Pentagon and allied governments, while highlighting the durability of its aeronautics franchise. The contract expansion also strengthens cash flow predictability and supports long-term earnings resilience amid broader defense spending priorities.
▣ Qualcomm (QCOM) completed its approximately $2.4 billion acquisition of Alphawave Semi, a U.K.-based specialist in high-speed connectivity and chiplet technologies, marking a significant strategic step beyond its traditional handset-centric business. The transaction strengthens Qualcomm’s capabilities in data centers, networking, and AI infrastructure, areas where demand is being driven by accelerating workloads and the need for faster, more energy-efficient data movement. By integrating Alphawave’s intellectual property and engineering expertise, Qualcomm meaningfully expands its total addressable market into higher-growth compute segments that complement its existing portfolio.
The deal was formally cleared after the England High Court sanctioned Qualcomm’s acquisition of Alphawave IP Group, removing a key regulatory hurdle.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.92% | +5.73% | $6,167.82 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Mar 17, 2026 | Apr 02, 2026 | 2.46% | $6.80 |
| Amgen (AMGN) | Feb 17, 2026 | Mar 10, 2026 | 3.27% | $9.52 |
| BlackRock (BLK) | Mar 09, 2026 | Mar 24, 2026 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jan 07, 2026 | Jan 29, 2026 | 5.98% | $3.21 |
| EOG Resources (EOG) | Jan 16, 2026 | Jan 30, 2026 | 3.06% | $4.08 |
| ExxonMobil (XOM) | Feb 12, 2026 | Mar 10, 2026 | 3.64% | $4.12 |
| Honeywell International (HON) | Mar 03, 2026 | Mar 17, 2026 | 2.39% | $4.76 |
| IBM (IBM) | Feb 10, 2026 | Mar 10, 2026 | 3.14% | $6.72 |
| JPMorgan Chase (JPM) | Jan 06, 2026 | Jan 29, 2026 | 3.43% | $6.00 |
| Kroger (KR) | Feb 17, 2026 | Mar 03, 2026 | 3.08% | $1.40 |
| Lockheed Martin (LMT) | Mar 03, 2026 | Mar 30, 2026 | 2.85% | $13.80 |
| PepsiCo (PEP) | Mar 10, 2026 | Mar 31, 2026 | 3.8% | $5.69 |
| Philip Morris (PM) | Mar 24, 2026 | Apr 14, 2026 | 6.06% | $5.88 |
| Qualcomm (QCOM) | Mar 05, 2026 | Mar 26, 2026 | 2.36% | $3.56 |
| VICI Properties (VICI) | Mar 27, 2026 | Apr 07, 2026 | 5.22% | $1.8 |
| Verizon (VZ) | Jan 12, 2026 | Feb 03, 2026 | 6.09% | $2.76 |
NameEX-Dividend DatePayment DateYield on Cost Annual DPS
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
