For more than 60 years, Coca-Cola (KO 1.27%) has been an ultra-reliable dividend stock that raised its payout every year, no matter what the economy was doing.

Coke's consistency can be attributed to its business model, which is focused on non-alcoholic beverages, a highly efficient global supply chain, partnerships with bottling plants worldwide, and excellent marketing.

Even with those advantages, Coke has failed to increase its sales or earnings at a fast rate over the last decade. And it's unlikely Coke will strike gold with a breakthrough beverage that kicks its growth rate into a new gear. Therefore, investors want to ensure they don't overpay for Coke stock, which may be a concern given it is up 11.7% over the last month (at the time of this writing).

Here's what's fueling the rapid rise in the stock price and whether Coke is a dividend stock worth buying now.

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Overcoming demand challenges

Coke's fourth-quarter results were excellent -- fueling the recent rise in the stock price.

Coke's unit case volume (a key metric for measuring demand) grew 2% in the quarter thanks to strong results in China, Brazil, and the U.S. The recovery in China and an overall uptick in unit case volume are likely driving the stock's recent rise.

In the prior quarter, Coke's unit case volume declined -- a red flag that demand was softening for a company that had been doing a masterful job navigating higher costs and consumer demand trends. Coke proceeded to fall 9.1% in October of last year.

The big swings in Coke's stock price in recent months showcase the importance of demand trends. When Coke is getting bogged down by broader industry trends, investors may be less willing to pay a premium price for the dividend stock. But when Coke is flexing its brand power and overcoming industry challenges, it can be viewed as an industry leader and fetch a higher valuation.

For the full year, Coke was able to grow organic revenue by 12% -- largely thanks to price increases and a change in favorable mix as consumers gravitated toward higher-margin products. Most impressive is Coke's ability to overcome extreme currency impacts due to a strong U.S. dollar.

In Latin America -- Coke's fastest-growing region -- unit case volumes increased by 3% in 2024. Pricing and mix were up 21%. But currency headwinds were 14% worse than in 2023, so reported net revenue was up 11%. Generating double-digit sales growth despite a massive currency impact is a testament to the strength of Coke's global exposure in burgeoning markets like Latin America.

In sum, Coke was able to generate a slight uptick in unit case volume in 2024 and more than offset currency headwinds with pricing power.

Coke's ace in the hole

Coke's size gives it inherent advantages, such as financial muscle, supply chain, distribution, marketing, etc. But what really separates Coke from its competition is brand development.

Coke has an impeccable track record of organically developing brands and making effective mergers and acquisitions (M&A). On the earnings call, Coke went into detail about its M&A platform, discussing how it has created $15 billion brands organically but has also bought 12 small brands and developed them into $1 billion-plus brands while only acquiring three brands that were over $1 billion.

Coke doesn't just dominate soda, it is also the No. 1 player in water based on 2024 retail value (Dasani, Smart Water, Vitamin Water, Topo Chico, etc.), the No. 1 sports drink brand (Powerade, BodyArmor, Aquarius), and the No. 1 global player in juice (Minute Maid, Simply, Maaza).

Coke has several success stories across non-alcoholic beverage categories. For example, Coke took the retail value of Fairlife from $10 million in 2014 to $4 billion in 2024. Fairlife's drink lineup of protein shakes, mike shakes, and meal replacement options with high protein and low sugar adds diversification to Coke's existing portfolio.

Coke wants to ensure it is well positioned to attract health-conscious consumers. In 2024, trademark Coca-Cola grew just 2% worldwide, but Coca-Cola Zero Sugar grew 9%. The future of Coke's growth is much more dependent on its newer brands and other flavors of existing brands rather than its flagship product.

In sum, Coke has done an exceptional job of recognizing the need to diversify beyond trademark Coca-Cola into other non-alcoholic beverage categories and then take those products to new heights using its global network.

Coke remains a good value

For 2025 Coke expects organic revenue growth of 5% to 6%, a currency headwind of 3% to 4%, currency-neutral earnings-per-share (EPS) growth of 8% to 10%, and comparable EPS growth of 2% to 3% due to a whopping 6% to 7% currency headwind. Based on comparable EPS of $2.88 in 2024, that would give Coke $2.95 in comparable EPS in 2025, good for a 23.7 forward price-to-earnings ratio based on Coke's stock price of around $70 at the time of this writing.

Despite the rapid run-up in Coke's stock price over the last month, the valuation remains reasonable because Coke was so beaten down in the last quarter of 2024. In fact, if you zoom out, Coke's stock price is up around 17% in the last five years compared to a monster gain in the S&P 500.

Coke has paid and raised its dividend for 62 consecutive years -- making it a Dividend King. Dividend Kings are companies that have paid and raised their dividends for at least 50 years.

Coke currently yields 2.8%, which is better than the average stock in the consumer staples sector and much higher than the S&P 500. For context, the Vanguard Consumer Staples ETF, which mirrors the performance of the sector, yields 2.3%. And the Vanguard S&P 500 ETF yields 1.2%. All told, Coke remains a solid source of passive income at a fair valuation.

A foundational dividend stock to build a passive income portfolio around

Coke is the perfect dividend stock for risk-averse investors. The company continues to expand its beverage lineup beyond flagship Coca-Cola, giving it pricing power and diversification even during a challenging period in the business cycle.

Normally, a big increase in Coke stock in a short period would cause concern that its valuation is getting overextended. However, given the context of Coke's earlier quarterly prints and years of its stock price going practically nowhere, the run-up doesn't damage Coke's investment thesis.

Investors aren't getting the bargain bin price for Coke stock anymore, but it's still a great buy now.