Key Takeaways
- Kraft Heinz yields 6.5% and Coca-Cola yields 2.3%, but Kraft Heinz’s dividend hasn’t grown since fiscal 2020, while Coca-Cola’s grew 4.5% a year from fiscal 2020 to fiscal 2025.
- Over the latest twelve months, Kraft Heinz’s dividend used 50% of its free cash flow and Coca-Cola’s used 79%.
- Coca-Cola’s revenue grew 7% in its third quarter, while Kraft Heinz expects lower organic sales in 2026 and a 16% to 18% drop in constant-currency adjusted operating income.
- Coca-Cola trades near the top of its five-year valuation range, and it expects a court ruling in its IRS tax dispute in the coming months.
Kraft Heinz (KHC) held its quarterly dividend at $0.40 a share on Nov. 4. The same day, its third-quarter adjusted EPS of $0.53 beat the $0.42 analysts expected, it raised its 2026 adjusted EPS outlook, its shares rose, and it agreed to sell its North American coffee business.
Coca-Cola (KO) had already lifted its 2026 free cash flow guidance on Oct. 27, after a strong third quarter, and its stock is up 43% in the year to Nov. 2.
So one stock pays a 6.5% yield, and the other pays 2.3% on a dividend that keeps growing. Which is the better dividend stock?
| Metric | Coca-Cola (KO) | Kraft Heinz (KHC) |
|---|---|---|
| Dividend yield | 2.3% | 6.5% |
| Annual dividend | $2.12 | $1.60 |
| Dividend growth, fiscal 2020-2025 | 4.5% a year | 0.0% a year |
| Cash dividend payout ratio (TTM) | 79% | 50% |
| Net debt/EBITDA (LTM) | 1.5x | 2.7x |
| Interest coverage (LTM) | 10.7x | 4.9x |
Source: TIKR and StockAnalysis, Nov. 5, 2026. TTM to Oct. 2, 2026 for Coca-Cola and June 27, 2026 for Kraft Heinz.
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Coca-Cola’s free cash flow is back
Coca-Cola’s business is in good shape. Third-quarter revenue grew 7% from a year earlier to $13.4 billion, and unit case volume rose 5%. Management expects at least 5% organic revenue growth and at least 11% comparable EPS growth for 2026.
The dividend has grown along with the business, from $1.64 a share in fiscal 2020 to $2.04 in fiscal 2025. Free cash flow had a rougher stretch. It covered the dividend through fiscal 2023, then fell short of it in fiscal 2024 and fiscal 2025:
This year, the cash has come back: $11.4 billion of free cash flow through the third quarter, and management guides to at least $13.0 billion for 2026. Over the twelve months to Oct. 2, the dividend took a covered but snug 79% of free cash flow.
CFO John Murphy said on the third-quarter call that Coca-Cola is there to return capital to shareholders, and “at the moment, that’s primarily through our dividend.”
Then there’s the IRS. Coca-Cola expects a court decision in its long-running tax dispute in the coming months, and a loss could mean about $14 billion of extra tax and interest for 2010 to 2025.
Kraft Heinz pays more from a shrinking business
Kraft Heinz’s check is nearly three times as big, but a shrinking business pays it. Third-quarter net sales fell 2.0% from a year earlier to $6.1 billion. For 2026, the company guides organic net sales down 0.5% to 1.25% and constant-currency adjusted operating income down 16% to 18%, even after raising adjusted EPS guidance to $2.07-$2.13.
The dividend was $1.60 a share in both fiscal 2020 and fiscal 2025, below fiscal 2015’s $1.70. Kraft Heinz’s third-quarter release lists sustaining the dividend among its priorities, alongside investing in the business and reducing debt, so I wouldn’t count on raises soon.
The cash behind it has gotten much stronger, though. Free cash flow has covered the dividend with room to spare since fiscal 2023:
The cash dividend payout ratio fell from 126.2% in fiscal 2022 to 51.8% in fiscal 2025, and it was a well-covered 50% over the twelve months to June 27. Debt is coming down too: long-term debt was $18.0 billion at Sept. 26, down from $21.2 billion at Dec. 27, 2025.
So which dividend wins?
Kraft Heinz is the better dividend stock right now. What decides it for me is the income, and how well it’s covered today. $10,000 in Kraft Heinz pays $650 a year at its 6.5% yield, against $230 for Coca-Cola. Even at its 4.5% growth rate, Coca-Cola’s income on that $10,000 would reach about $341 in year 10, a 3.4% yield on the original stake. At that pace, it wouldn’t pass Kraft Heinz’s $650 until about 2050.
And Coca-Cola’s buyers are paying up for that growth. At 28x forward earnings, it trades near its five-year high and well above its 23x average:
Kraft Heinz trades at 13x.
This isn’t to say Coca-Cola’s dividend is in trouble. Its business is growing, its free cash flow has rebounded, its balance sheet is the stronger of the two, and its dividend keeps rising. It’s just that, when it comes down to it, Kraft Heinz pays far more today with more room to spare, and Coca-Cola’s investors are paying a premium to wait.
Of course, Kraft Heinz’s turnaround still has to show up in its sales, and management plans to give more detail on 2027 at an upcoming investor meeting. If operating income keeps falling, that coverage could narrow.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
