Jim Cramer Says Buy Coca-Cola. Is Its Dividend Still Worth It After a 35% Rally?
Coca-Cola just posted its sixth straight earnings beat and Jim Cramer is pounding the table, but a 35% rally changes the math for retirees counting on that dividend yield to do real work.
Jim Cramer backed Coca-Cola (NYSE:KO | KO Price Prediction) on Wednesday night’s Mad Money. In the lightning round, a caller asked him to choose between Broadcom (NASDAQ:AVGO) and Coca-Cola. Cramer answered: “Broadcom has been one of the greatest performers of all time, but so is Coca-Cola. I wouldn’t shoot Broadcom, and I would buy Coca-Cola.”
The call came one day after a strong earnings report. Coca-Cola shares have also risen 34.76% year to date, so retirees face a real question. Does the dividend still justify buying at $92.41?
A Raised Outlook Backs Up Cramer’s Call
Coca-Cola reported third-quarter results on October 27, 2026. Adjusted EPS came in at $0.91, above the $0.88 estimate. That made it the company’s 6th consecutive EPS beat. Revenue reached $13.38 billion, ahead of the $12.93 billion estimate and up 7.4% year over year. Global unit case volume rose 5%, Coca-Cola Zero Sugar grew 16%, and comparable operating margin expanded to 32.9% from 31.9%.
Management also raised full-year guidance. Comparable EPS growth is now at least 11% (prior 9-10%), and free cash flow is expected to reach at least $13.0 billion (prior ~$12.4 billion), according to the earnings release filed with the SEC. CEO Henrique Braun said, “Our results this quarter demonstrate our system’s sustained momentum, giving us confidence in our updated full-year guidance.”
Dividend Coverage Leaves Room to Spare
In the first three quarters of 2026, Coca-Cola paid $2.281 billion, $2.281 billion and $2.28 billion in dividends. CFO John Murphy said on the earnings call that “Year-to-date free cash flow was $11.4 billion, an increase versus the prior year.” That means dividends used roughly 60% of free cash flow, leaving room for buybacks and debt management. Net debt leverage is at 1.3 times EBITDA, below the company’s 2 to 2.5 times target range.
Verifying the Dividend King Streak
Coca-Cola said the $8.8 billion it paid in 2025 marked its 63rd consecutive year of dividend increases. The payment history matches that claim. The quarterly payout rose from $0.42 in 2021 to $0.44, $0.46, $0.485, and $0.51, then to $0.53 with the declaration on February 19, 2026, a raise of about 3.9%. We covered that milestone in our look at Coca-Cola’s 64th straight raise. The next $0.53 payment goes out December 15 to holders of record on December 1.
Valuation Is the Price of Admission
The annualized forward dividend of $2.12 works out to a yield of about 2.29%. The stock trades at roughly 30 times trailing earnings and about 75 times free cash flow. Guidance calls for at least 11% comparable EPS growth over the $3 earned in 2025, which puts the forward multiple near 28. Shares are up 35.23% over the past year and 89.79% over five years. Much of the good news is already reflected in the price, so new buyers start with a lower yield than investors who bought a year ago.
One Risk Every Retiree Should Track
The biggest swing factor is Coca-Cola’s tax dispute with the IRS. Murphy said the company is “continuing to judiciously manage our balance sheet as we await a court decision related to our ongoing dispute with the IRS.” A negative ruling could draw on cash that would otherwise go to buybacks or larger raises. Management also expects re-franchising Coca-Cola Beverages Africa to create an eight-point headwind to comparable net revenues and a two-point headwind to comparable earnings per share in 2027. In addition, the fourth quarter has six fewer days than a year ago.
Verdict: What Income Investors Need to Know About Cramer’s Call
For retirees who value reliability, the data lines up with several of Cramer’s points. Dividends take up about 60% of free cash flow, guidance just went up, and the payout has grown every year for more than six decades. The cost is a starting yield near 2.3% and a premium multiple so that future returns will depend mostly on earnings growth. Watch two things: the IRS court decision and the next dividend declaration, which Coca-Cola has announced in February each of the past four years.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
