Key Takeaways
- Realty Income yields about 6%, compared with about 2.5% for Coca-Cola.
- Coca-Cola has grown its dividend faster: about 4.5% a year over five years, against 2.9% for Realty Income.
- Coca-Cola’s free cash flow fell short of its dividends in four of the last ten years, including 2024 and 2025, but it covered them again over the last twelve months.
- Coca-Cola carries far less debt, at 1.6 times EBITDA against about 5.7 times for Realty Income.
Coca-Cola (KO) and Realty Income (O) are two of the most widely held dividend stocks around, and both had a good summer.
On July 28, Coca-Cola reported organic revenue up 6% for its second quarter and raised its full-year outlook. About a week later, Realty Income reported adjusted funds from operations (AFFO) per share up 3.8%, after announcing its 115th consecutive quarterly dividend raise in June.
Coca-Cola pays about 2.5%, though, and Realty Income pays more than 6% every month. So which is the better dividend stock?
| Metric | Coca-Cola (KO) | Realty Income (O) |
|---|---|---|
| Dividend yield | 2.5% | 6.1% |
| Annual dividend | $2.12 (paid quarterly) | $3.25 (paid monthly) |
| Dividend growth, 5 years | 4.5% a year | 2.9% a year |
| Record of raises | [KO’s own count] years | Over 31 consecutive years |
| Coverage | 77% cash dividend payout ratio (TTM) | 75% AFFO payout ratio (fiscal 2025) |
| Net debt / EBITDA | 1.6x | 5.7x |
| Interest coverage | 10.2x | 2.4x |
Source: TIKR, Oct. 5, 2026; dividend rates from StockAnalysis; records from the companies.
Coca-Cola: the brand is still growing
Coca-Cola’s business is in good shape. Second-quarter revenue grew 7% to $13.4 billion, unit case volume rose 5%, and Coca-Cola Zero Sugar grew 16%. CEO Henrique Braun said the flagship brand had its best quarter in a long time:
“Activating around the FIFA World Cup contributed to Trademark Coca-Cola volume growth of 5% for the quarter, its strongest volume growth in 17 years, excluding COVID recovery.”
Coca-Cola funds its dividend with free cash flow, so that’s the number that matters most here. Over the past 12 months, the company paid $11.06 billion in dividends against $14.30 billion in free cash flow, putting its payout ratio at a manageable 77%.
The full-year numbers tell a less consistent story, though…
Free cash flow ran below the dividend in four of those ten years: 2017, 2018, 2024, and 2025. The last two left the widest gaps, at $4.74 billion and $5.30 billion against $8.36 billion and $8.78 billion paid out. It has bounced back since, with $6.9 billion of free cash flow in the first half of 2026 alone.
The main risk is Coca-Cola’s long-running tax dispute with the IRS, which is waiting on a decision from the 11th Circuit Court of Appeals.
Realty Income: a decade of steady coverage
Realty Income’s dividend coverage hasn’t had any of those swings. As a REIT, buying property is its business, so its free cash flow says little about its dividend. It’s judged instead on its AFFO payout ratio: dividends as a share of AFFO, roughly the cash its leases bring in after running costs and interest.
In fiscal 2025, it paid $3.22 a share against $4.28 of AFFO, a 75% payout ratio that leaves a healthy cushion. That cushion has been widening…
AFFO per share rose every year, from $2.88 to $4.28, while the dividend went from $2.39 to $3.22, so the payout ratio eased from about 83% to 75%.
The business is still growing, too. Second-quarter AFFO per share rose 3.8% to $1.09, occupancy held at 98.8%, and the company invested $2.6 billion, led by industrial properties and data center joint ventures. The record is long as well: the company says it has “declared 673 consecutive monthly dividends” and has increased its dividend “for over 31 consecutive years.”
The risk is debt. Net debt runs 5.7 times EBITDA, and earnings cover interest only about 2.4 times, so higher interest rates hit Realty Income harder than Coca-Cola.
So which dividend wins?
Realty Income looks like the better dividend stock. A $10,000 investment today would generate about $610 in annual income, compared with roughly $250 from Coca-Cola. If both dividends grow at their five-year rates, that gap widens to about $790 versus $370 after 10 years. Coca-Cola’s annual income would not catch up until around 2086. Realty Income also has a stronger track record of covering its dividend with AFFO.
That’s a lot of income to leave on the table.
This isn’t to say Coca-Cola’s dividend is in trouble. Its brands are growing, its dividend has grown faster, and its balance sheet is far stronger, with interest covered about 10 times over. Its year-10 income works out to about a 3.7% yield on your cash today. That’s not much on its own, but you’d also want to weigh the capital appreciation from a business that’s still gaining share.
Of course, Realty Income leans on debt to grow, and if interest rates move the wrong way, its raises could slow.
So what is Realty Income stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Realty Income could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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!
