Berkshire Hathaway (NYSE: BRKA ) (NYSE: BRKB ) made a position in coca cola (NYSE: KO ) The stock between 1991 and 1994, and today, it owns 9.3% of the company, worth more than 31 billion dollars.
Coca-Cola is the classic dividend king with an almost unbroken record of raising its dividend for 63 consecutive years. It’s been more than six decades since the stock market and global events spanned the spectrum, from wars and hyperinflation to global pandemics and market crashes. It’s as flexible as they come.
Will AI create the world’s first trillionaire? Our team just published a report on a little-known company, called “Essential Dependency” that provides critical technology to both Nvidia and Intel. Continue ยป
Dividends typically yield around 3%, which is a high yield. While this is attractive to new investors, you can see how leverage and reliability are more important than you might think by looking at Berkshire Hathaway’s yield on its cost basis.
Berkshire Hathaway amassed 400 million shares of Coca-Cola stock during its buyback, spending a total of about $1.3 billion. Today, that position is worth nearly 24 times that amount. While impressive in and of itself, Berkshire Hathaway has gotten more out of this investment in dividends.
The cost basis per share of the investment is $1.3 billion divided by $400 million or $3.25. Annual dividends per share are $2.12 since it raised dividends for the 64th time in February, meaning the yield on a cost basis is 65% and Berkshire will receive $848 million in dividend payments next year. As long as Berkshire Hathaway holds onto its Coca-Cola shares, it receives steadily increasing returns from the investment each year, which comes close to recovering the full amount of its investment. At some point, the total benefits must exceed the total cost of the initial investment every year. This is the power of buying the best dividend stocks and holding them forever.
Before you buy stock in Coca-Cola, consider this:
of the Motley Fool Stock Advisor The analyst team identified only what they believed 10 best stocks For investors to buy now… and Coca-Cola was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix This list was created on December 17, 2004 … If you invested $1,000 at the time of our recommendation, You will have $508,607or when Nvidia This list was created on April 15, 2005 … If you invested $1,000 at the time of our recommendation, You will have $1,122,746!*
