History Says Coca-Cola Stock Holds Up When the S&P 500 Falls
Historical data suggests that Coca-Cola stock often outperforms the S&P 500 during market downturns, acting as a defensive asset. Despite its strong performance, the stock is currently trading at a high valuation relative to its earnings.
Why it matters
Investors often look for 'recession-proof' stocks like Coca-Cola to hedge against broader market volatility.
Since 1980, the S&P 500 ( ^GSPC +0.73% ) has lost money in eight calendar years, even counting dividends. These years were 1981 and 1990, the three years from 2000 to 2002, and then 2008, 2018, and 2022.
In seven of those eight years, Coca-Cola ( KO -0.52% ) posted a higher total return (the change in the stock price plus dividends ) than the index. And in five of them, the drinks giant's shareholders made money even though the market dropped.
Averaged over all eight years, Coca-Cola's total return was around 1% a year, while the index averaged a loss of about 14%.
In other words, across the market's bad years, Coca-Cola's shareholders have ended up about even on average.
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