Should You Forget Sirius XM? This Stock Has Made Far More Millionaires

For investors who are old enough to remember, the latter half of 1990s was an incredible time. The advent of the internet and the subsequent proliferation of personal computers was going strong, yet conventional cable television and broadcast radio were still the chief way people consumed live media.

The creation of satellite-delivered subscription-based radio companies Satellite CD Radio Inc. and American Mobile Radio -- both of which would eventually change names and then merge become Sirius XM Holdings (NASDAQ: SIRI) -- was almost mind-bending at the time. Shares of this whole new kind of company soared right out of the gate following their 1994 public offering, and understandably so.

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Things aren't quite as thrilling now. The internet, as it turns out, is also a solid and more flexible vehicle for delivering audio entertainment.

Still, Sirius XM is evolving in some compelling ways. It's still adding more and better ad-supported options to its mix of exclusive shows and stations, for instance, keeping its service affordable as well as relevant. It's no wonder some investors are buzzing again.

If you're looking for a proven, less speculative prospect to invest in though, Sirius XM isn't it. You're better off with much more boring Coca-Cola (NYSE: KO), which has made far more millionaires than Sirius XM ever has.

Bigger and better than you might think it is

Surprised? It would be a bit surprising if you weren't. Sirius XM Holdings' proverbial second act is at least somewhat promising. Coca-Cola is, well, soda.

Don't confuse boring for unproductive though, just as you shouldn't mistake promising for productive. There's much to be said for predictability when the product in question is a cultural favorite that people buy over and over again.

But first things first.

Yes, Coca-Cola is its namesake cola, but that's hardly all the company is. Gold Peak tea, Powerade sports drink, Minute Maid juice, Schweppes ginger ale, and Dasani water are just some of the other brands in this beverage giant's portfolio. It's got something to sell to everyone regardless of consumers' ever-changing preferences.

It's also the world's biggest and best-known non-alcoholic beverage company. Coke's current market cap of $300 billion is greater than any other player's in the business. And brand consultancy Interbrand ranks Coca-Cola as the world's seventh-best brand of 2024, behind Toyota Motor and ahead of Mercedes-Benz, and the only drinks name to crack last year's top 25.

More to the point for interested investors, The Coca-Cola Company is clearly leveraging its sheer size and reach. With its name, colors, and trademarked logo now regularly emblazoned on everything from Christmas ornaments to toys to home décor, there's no denying the brand has woven itself into the fabric of our culture, and is here to stay.

But a millionaire-making stock? Actually, yes.

Crunching Coca-Cola's numbers

There's no denying Coca-Cola isn't a high-growth company. In a good normal year it does well to produce top-line growth in the upper single digits. It's just the nature of any business when the market is already highly saturated.

What this organization lacks in growth firepower, however, it more than makes up for in another way. That's consistent sales growth, which in turn drives consistent profit and dividends regardless of the economy's condition.

The graphic below tells the tale. With the exception of the period between 2015 and 2018 when the company was restructuring its operations by selling the bulk of its domestic bottling operations back to third-party partners, operating income as well as earnings before interest, taxes, depreciation, and amortization (EBITDA) and per-share profits have made slow-but-steady forward progress, allowing the dividend to do the same. In fact, The Coca-Cola Company's dividend has now been raised in each of the past 63 years.

KO EBITDA (TTM) data by YCharts

And that's been the secret of long-term shareholders' success. Reinvesting this ever-rising dividend in more shares of the stock paying them has slowly but surely built an incredible amount of wealth. A $10,000 investment in Coca-Cola stock made back in early 1985 would be worth $1.3 million today, with over half of these net gains being the result of consistently reinvesting the stock's dividends dished out over the course of the 40-year span.

KO Total Return Price data by YCharts

Also notice that the bulk of this growth took shape in just the last few years of this four-decade stretch, underscoring that the bulk of compounding's impact materializes during the last one-third of whatever time frame you're talking about.

This growth rate averages to about 13% per year, by the way, which is better than the overall stock market's annualized growth of around 10% for this period. It also made these gains with considerably less volatility than the broad market usually dishes out.

Just be smart and play the proven odds

None of this is to suggest that Sirius XM is un-ownable at this time, or to say that The Coca-Cola Company is your only viable alternative. Sirius may well perform as expected for you. Something could happen to derail Coca-Cola in the foreseeable future.

From an odds-making perspective, though, all too often it's the market's most buzzy tickers that end up being the most disappointing, while its relatively boring names end up outperforming most others. It's a testament to the overlooked upside of consistency. It's also a reminder that hype-driven hope and the fear of missing out -- or FOMO -- can easily lead investors into making ill-advised choices.

Do with it what you will. Just remember that your chief goal as an investor isn't owning stocks with scintillating stories. It's making money. Somehow those two outcomes aren't often achieved by the same names.

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James Brumley has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.