Key Takeaways
- Walmart yields 0.8% and Coca-Cola 2.3%, and both raised their dividends again this year.
- Walmart’s dividend takes 57% of its free cash flow over the trailing 12 months, against 79% for Coca-Cola.
- Coca-Cola’s free cash flow fell short of its dividend in 2024 and 2025 before recovering, and the company raised its 2026 free cash flow guidance in October.
- $10,000 in Walmart pays $80 a year today against $230 from Coca-Cola, and at their five-year growth rates, Walmart’s income wouldn’t catch up for more than 30 years.
If you want a dividend that goes up every year, Walmart (WMT) and Coca-Cola (KO) are about as dependable as it gets. Both have also given income investors good news lately. Walmart raised its full-year guidance in August, and Coca-Cola raised its free cash flow outlook in October.
But if you’re counting on those raises, their size matters as much as their streak. So which of these dividends should grow faster from here?
| Metric | Walmart (WMT) | Coca-Cola (KO) |
|---|---|---|
| Dividend yield | 0.8% | 2.3% |
| Annual dividend | $0.99 | $2.12 |
| Dividend growth, 5 years | 5.5% a year (fiscal 2021-2026) | 4.5% a year (2020-2025) |
| Dividend growth, 10 years | 3.8% a year (fiscal 2016-2026) | 4.4% a year (2015-2025) |
| Cash dividend payout ratio (TTM) | 57% | 79% |
| Net debt/EBITDA | 1.3x | 1.5x |
| Interest coverage | 12.3x | 10.7x |
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Walmart keeps its payout small
Walmart’s growth is coming from a lot more than store shelves. In its second quarter, the three months to July 31, 2026, revenue rose 5.9% to $187.9 billion and operating income jumped 28.8% (17.4% adjusted, at constant currency) from a year earlier. Global e-commerce sales grew 23%, advertising 38% and membership fee revenue 17%.
Walmart is putting a lot of that money back into prices. “We’re investing heavily in price because customers need us to and because we believe it drives market share gains over time,” CEO John Furner said on the second-quarter call.
The dividend leaves plenty of room for that spending. Free cash flow covered it comfortably in each of the last 10 fiscal years, and dividends took 50.3% of it in fiscal 2026, the year ended January 2026:
Over the 12 months to July 31, 2026, its cash dividend payout ratio is a well-covered 57%. Costs are the main risk. Walmart expects more than $2 billion of extra fuel costs this year beyond what its original guidance assumed. Its free cash flow for the six months to July 31 fell $1.4 billion from a year earlier, to $5.5 billion.
Coca-Cola’s cash is back
Coca-Cola pays out a much bigger share of its cash than Walmart, and its record shows the strain. Its dividend payments rose every year from 2016 to 2025, from $6.04 billion to $8.78 billion. But free cash flow fell short of them in four of those 10 years, including 2024 and 2025:
Those two years put its cash dividend payout ratio at a risky 176% and 166%. Over the 12 months to Oct. 2, 2026, the ratio is back to a more comfortable 79%. On Oct. 27, Coca-Cola raised its 2026 free cash flow guidance to at least $13 billion, from $12.4 billion. Its February raise, to 53 cents a quarter, was its 64th straight annual increase, and the board declared the same 53 cents again on Oct. 15.
The business is in good shape, too. Third-quarter net revenue grew 7% to $13.4 billion from a year earlier, and comparable EPS rose 11% to $0.91, with unit case volume up 5%. North America’s volume was even with a year earlier. On Sept. 25, Coca-Cola named Rob Gehring, Monster Energy’s CEO for the Americas, to run its North America unit starting Dec. 1.
The stock still fell 2% on the day of the report. Price/mix grew just 1% in the quarter, below the 2 to 3 points a year management targets over the long run. At 79%, the payout has little room to grow faster than earnings, and Coca-Cola expects divestitures to trim about 2% from its comparable EPS in 2027.
So which dividend wins?
Walmart’s dividend should grow faster from here. It rose 5.3% this year, to $0.99 a share, against 3.9% for Coca-Cola’s, to $2.12. And Walmart pays it with free cash flow to spare: 57% of it, against Coca-Cola’s 79%.
Walmart’s earnings have further to climb, too. Analysts expect its normalized EPS to rise from $2.64 a share in its latest reported year to $3.63 by the end of their forecasts:
None of this makes Coca-Cola the worse income stock. A $10,000 stake pays $230 a year today, against $80 from Walmart. At their five-year growth rates, Walmart’s income wouldn’t catch up for more than 30 years. Even if Walmart repeated its 13.3% raise of fiscal 2026 every year, it would take about 14 years, until 2041. Coca-Cola is also cheaper, at 28x forward earnings against Walmart’s 42x.
But faster raises need room in the cash flow, and Walmart has far more of it. Of course, Coca-Cola’s cash could keep recovering. It will give its 2027 guidance with its fourth-quarter results early next year.
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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!
