Why does Warren Buffett invest in Coca-Cola?
First, Coca-Cola was a durable, high- quality business with an extremely strong brand and competitive position. Second, he had confidence in the ability of the company's management to improve the business and behave in a shareholder-friendly manner.
Berkshire Hathaway will receive $776 million in dividends from Coca-Cola this year based on its current dividend rate. This equates to $194 million quarterly, or about $2.13 million daily.
You would have more than doubled your money, with a total investment worth of $2,029.55. That's a 103% return, or a 7.23% annual rate of return. Interestingly, despite co*ke's dominance on the world stage, investing in co*ke's main rival, Pepsi, 10 years ago would have given you more pop for your buck.
It's a Dividend King
Those annual dividend hikes will also help its investors stay ahead of inflation while compounding their returns. If you had reinvested Coca-Cola's dividends back over the past 40 years, you would have generated a total return of 13,340%.
Investment Thesis
Coca-Cola's strong brand equity, marketing, research and innovation have helped it garner a market share of more than 40% in the non-alcoholic beverage industry.
determined that Coca-Cola was a good company, had great value, could withstand competition, and was poised to recover. The Coca-Cola stake marked a significant change in Buffett's investing philosophy.
Buffett loves The Coca-Cola Company (NYSE: KO) and its soft drinks. Coca-Cola has been in Berkshire's portfolio longer than any other stock. Buffett views co*ke as one of the stocks Berkshire will never sell. It's a Dividend King with 62 consecutive dividend increases.
The only downside to Coca-Cola stock is that overpaying for it can hurt your investment returns. While Coca-Cola is consistent, growing at a mid-single-digit pace makes your price critical because the company won't quickly outgrow a premium paid for the stock.
Coca-Cola Company (NYSE:KO) has announced annual dividend increases over the past 62 years without a break, an achievement which has made it one of the safest dividend stocks in the market.
The ownership structure of Coca-Cola Bottling Co Consolidated (co*kE) stock is a mix of institutional, retail and individual investors. Approximately 34.21% of the company's stock is owned by Institutional Investors, 30.45% is owned by Insiders and 35.34% is owned by Public Companies and Individual Investors.
What are the 10 best stocks to buy right now?
| Company (ticker) | Analysts' consensus recommendation score | Analysts' consensus recommendation |
|---|---|---|
| ServiceNow (NOW) | 1.49 | Strong Buy |
| Assurant (AIZ) | 1.50 | Strong Buy |
| Howmet Aerospace (HWM) | 1.50 | Strong Buy |
| Insulet (PODD) | 1.50 | Strong Buy |
Shares can be purchased through a Direct Stock Purchase and Dividend Reinvestment Plan sponsored and administered by Computershare Trust Company, N.A. Details about the Computershare Investment Plan, including any fees associated with the Plan, can be viewed and printed from Computershare's website.
Coca-Cola Co has the Financial Strength Rank of 6.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is.
Pepsi is the cheaper stock, but investors might still prefer paying the premium for co*ke over its less expensive rival. Sure, you can own Pepsi for 2.5 times sales, or less than half of co*ke's price-to-sales (P/S) ratio of 5.6. You'll get roughly the same 3% dividend yield in either case.
A massive passive income stream
Berkshire currently owns 400 million shares of Coca-Cola. This means that on an annualized basis, Warren Buffett's company generates $736 million in dividend income from the beverage giant. That is a huge passive income stream that likely explains why Buffett isn't exiting the position.
Purchasing power: As one of the largest companies in the world, Coca-Cola has significant purchasing power, which allows it to negotiate lower prices for raw materials, packaging, and other inputs. This can result in lower production costs and higher profits. This is also known as monopsony power.
| Company | Shares held | Percent of portfolio |
|---|---|---|
| Apple (AAPL) | 789,368,450 | 40.81% |
| Bank of America (BAC) | 1,032,852,006 | 11.81% |
| American Express (AXP) | 151,610,700 | 10.41% |
| Coca-Cola (KO) | 400,000,000 | 7.38% |
While being interviewed by journalist Rebecca Jarvis, he showed off his favorite places in the city, including the local McDonald's. When Jarvis asked what he typically ordered there, Buffett replied, “Three times out of four, I get the sausage McMuffin. Lunchtime I get the Quarter Pounder and fries.”
Warren Buffett's Berkshire Hathaway acquired Dairy Queen for nearly $600 million in 1998. Dairy Queen CEO Troy Bader told Insider that Berkshire's ownership lets him invest for the long run. Bader explained how Dairy Queen has dealt with the pandemic, inflation, and new customer demands.
Apple is Berkshire's largest public stock holding by far. Berkshire's $183 billion Apple stake is more than four times larger than its second-largest holding. Buffett first bought Apple shares in the first quarter of 2016. AAPL's price is up more than 800% since the beginning of 2016.
What was Warren Buffett's best investment?
Coca-Cola
He began buying shares in the beverage giant in 1988, which remains a significant holding today at 8.51% of the Berkshire portfolio. Coca-Cola's strong brand and global reach have made it a consistent performer. This was one of Buffett and Munger's favorite investments of all time.
Reinvesting Is Top Priority
In particular, Buffett prefers to reinvest profits in the companies he controls to improve their efficiency, expand their reach, create new products and services, and improve existing ones.
Those annual dividend hikes will also help its investors stay ahead of inflation while compounding their returns. If you had reinvested Coca-Cola's dividends back over the past 40 years, you would have generated a total return of 13,340%.
Now in its 62nd year of consecutive dividend raises, Coca-Cola pays a quarterly dividend of $0.485 per share, which shakes out to an annual yield of 3%. Considering the S&P 500 yields approximately 1.3%, the beverage giant is a favorite stock for income seekers.
Shares can be purchased through a Direct Stock Purchase and Dividend Reinvestment Plan sponsored and administered by Computershare Trust Company, N.A. Details about the Computershare Investment Plan, including any fees associated with the Plan, can be viewed and printed from Computershare's website.
