Coca-Cola (NYSE: KO) is one of the world's most recognizable brands. It has long led the soft drink market, thanks to its global reach and broad range of products. But that hasn't necessarily been beneficial to investors in recent times.

In the past five years, Coca-Cola has generated a total return of just 47%. The S&P 500, on the other hand, would've more than doubled your initial capital during the same period.

Shareholders are wondering if better days are ahead for the drink giant. Where will this dominant beverage stock be in five years?

Nowhere to grow

Investors need to realize that Coca-Cola is not going to report huge growth numbers. It's the opposite situation, actually. Revenue totaled $12.4 billion in the latest quarter (the fiscal second quarter of 2024, ended June 28), which represented a modest 24% increase compared to five years ago in Q2 2019.

Compared to rapidly expanding areas of the economy, Coca-Cola is a dinosaur. For what it's worth, though, the business has taken market share over the years.

According to Wall Street consensus analyst estimates, Coca-Cola is projected to increase its revenue at a compound annual rate of 3.6% between 2023 and 2026. That's certainly nothing to write home about.

But Coca-Cola uses a different strategy to move the needle to offset weaker unit volume growth. In the latest quarter, for example, prices for the company's various products were 4% higher than in the year-ago period (excluding markets that have very high levels of inflation). There's proven pricing power here.

Safe and stable

For investors who simply want peace of mind from the individual stocks they buy, there might be no better company to own than Coca-Cola. I mentioned earlier that it possesses one of the most powerful brands. This intangible asset is what protects the company's competitive position. And it has helped Coca-Cola remain relevant in the minds of consumers for such a long time.

Besides its brand strength, Coca-Cola is a safe business to buy and hold because it's consistently profitable. The company's operating margin has averaged a superb 27.6% in the past five years. That's better than a leading internet company like Alphabet.

Since the business is in a mature stage of its lifecycle, there isn't really much opportunity to reinvest into growth initiatives. As a result, Coca-Cola returns copious amounts of cash to shareholders. This helps boost investor returns.

A key part of the investment thesis must center on dividends. Coca-Cola's annual payout has increased in 62 straight years, a streak that's still active. That's an incredible track record that highlights the company's durability and consistency.

With its 400 million shares, Berkshire Hathaway is able to generate $776 million in passive annual income just from Coca-Cola's dividends. This is probably one of the main reasons why Warren Buffett doesn't sell his stake in the soft drink giant.

Don't expect huge returns

Coca-Cola hasn't been a winning investment when compared to the S&P 500. I don't see any reason why this trend won't continue.

As of this writing, shares trade at a price-to-earnings (P/E) ratio of 28. That's more than the market overall. And it represents a premium to Coca-Cola's trailing three- and five-year average P/E multiples. This looks like a terrible entry point for prospective investors.

Between now and August 2029, I'm confident that Coca-Cola will continue to produce a total return that underperforms the S&P 500. And that's precisely why I'm not considering adding the business to my own portfolio.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Where Will Coca-Cola Stock Be in 5 Years? was originally published by The Motley Fool