1 Magnificent Dividend Stock Down 7% to Buy Now for a Lifetime of Passive Income

Wall Street is part voting machine and part weighing machine. Near-term prices can be a bit volatile, but over the long term, investors tend to get pretty close to the right valuation for stocks.

Coca-Cola's (NYSE: KO) stock price is starting to come out of a brief funk, suggesting that there's still time to add this reliable high-yield stock to your passive income portfolio if you act quickly.

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What to like about Coca-Cola's stock

Coca-Cola's stock price is currently down around 7% from its 52-week high, but it was down around 10% not too long ago. A 10% drop is what's known as a correction on Wall Street. The term is normally associated with the broader market, but it applies to individual stocks, as well. The current drawdown in Coca-Cola's shares has made the price of the stock more attractive.

At the moment, Coca-Cola's price-to-sales and price-to-earnings ratios are below their five-year averages. The discount here isn't massive, but the stock doesn't go on the sale rack very often. So, any discount is one worth looking at.

On the dividend front, Coca-Cola has been a passive income dream come true. It has increased its dividend for more than six decades, placing it in the highly elite group of companies known as Dividend Kings. If you are looking for reliable dividends, there aren't many companies that can compete with Coca-Cola's track record.

The dividend yield, meanwhile, is only about middle of the road for Coca-Cola at roughly 3%. But 3% is well above the 1.2% of the S&P 500 index (SNPINDEX: ^GSPC) and higher than the 2.7% average for consumer staples stocks.

All in, you get a reliable dividend stock that has an attractive yield and what looks like a fair to slightly cheap price. There's a lot to like here for dividend investors.

What about Coca-Cola's business?

Coca-Cola is one of the largest consumer staples companies on the planet. It has the brand portfolio, distribution strength, marketing skill, and innovation chops to compete with any peer. In fact, Coca-Cola is the most important non-alcoholic beverage company in the world, with a brand that is recognized and loved in more than 100 countries.

What's so special about the business, however, is that Coca-Cola is basically just selling flavored water. That's an expensive way to satisfy a basic need, but the cost is fairly modest in the grand scheme of things. So it is an affordable luxury that most consumers won't willingly give up. There's a huge amount of brand loyalty in the beverage sector. So, even during periods of economic weakness, like recessions, Coca-Cola's business tends to be fairly resilient.

The recent pullback, meanwhile, is at least partly related to shifting consumer tastes. More and more people are looking for healthier food and beverage options. Investors are worried that sugary sodas aren't in line with current trends. Coca-Cola has a long history of adjusting along with consumers and, with a market cap of $290 billion, it has the scale to acquire entire companies if it needs to in order to update its brand portfolio. So, unless you believe that this time is different, it seems appropriate to give management the benefit of the doubt when it comes to adjusting to consumer taste preferences.

In fact, it is earning the benefit of the doubt as each quarter goes by. Despite operating in a difficult market right now, Coca-Cola was still able to increase case volumes by 1% in the third quarter of 2025. It leveraged that modest increase into 6% organic revenue growth and 6% adjusted earnings-per-share growth. It's not like Coca-Cola is hitting the ball out of the park, but it is still posting strong results even during a difficult period.

Good company + fair price = attractive opportunity

Coca-Cola's stock isn't dirt cheap from a valuation point of view. But it doesn't go on the sale rack very often, given how strong a business it has. A fair to slightly cheap price is usually a good entry point for long-term investors. That's particularly true if you are looking to build a reliable passive income stream. Don't let the current price correction here slip away from you -- do a deep dive into Coca-Cola right now.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.