Warren Buffett Hasn't Changed His Mind About This Stock in Years. Should You?
Key Points
Berkshire Hathaway has owned exactly 400 million Coca-Cola shares since 1994.
Coca-Cola's stock is a good choice for looking for a reliable, blue chip dividend stock.
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Although he retired at the end of last year, Warren Buffett's legacy and many of his top investments remain strong at Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB). One of Buffett's most storied investments is in Coca-Cola (NYSE: KO), which currently accounts for 9.8% of Berkshire's stock portfolio.
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Interestingly enough, however, Berkshire has owned exactly 400 million Coca-Cola shares since August 1994. Considering no changes in over three decades, should investors take that as a warning or a sign of trust? I think the latter.
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It's no secret that Berkshire's Coca-Cola holding has been all about the dividend. Although Berkshire hasn't bought any additional shares, the dividends it receives from Coca-Cola have increased every year. When Berkshire last added to its Coca-Cola stake, Coca-Cola's quarterly dividend was $0.20. With 400 million shares, that's $80 million in quarterly revenue. Today, those same shares pay Berkshire $212 million in quarterly dividends.
So, why hasn't Berkshire added more shares in close to 32 years? It mostly comes down to preference on where to put the capital. And that isn't always the same between the average investor and a trillion-dollar corporation. For the average investor looking for a reliable, above-average dividend, Coca-Cola is a great stock to consider.
Coca-Cola's stock price likely won't experience hypergrowth like some growth stocks, but it has one of the most reliable dividends in the stock market. It has increased its annual dividend for 64 consecutive years, making it one of the Dividend Kings (companies with at least 50 consecutive years of dividend increases). The yield will inevitably fluctuate, but you can bet the payout you receive won't be the payout you're receiving with each passing year.
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Stefon Walters has positions in Coca-Cola. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
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