Legendary investor Warren Buffett stepped down as CEO and chairman of Berkshire Hathaway (NYSE:BRK)(NYSE:BRK) within the last 12 months. Before leaving those roles, he helped establish an investment portfolio of stocks, including some that will benefit the conglomerate for years to come.
Berkshire’s Coca-Cola Bet
Buffett began buying shares of Coca-Cola (NYSE:KO) for Berkshire Hathaway back in 1988. Today, the position is one of the largest held by the conglomerate, representing around 9.3% of the investments at the end of the second quarter.
Along with benefiting from a rising stock price, with Coca-Cola shares hitting new all-time highs this year, Berkshire Hathaway benefits from quarterly dividend payments from the beverage giant.
Coca-Cola currently pays a quarterly dividend of 53 cents per share. Berkshire Hathaway owns 400 million shares.
This means Berkshire Hathaway gets $212 million from Coca-Cola each quarter, whether the stock price goes up or down. This translates to $848 million annually in dividend income from just this one stock.
What’s Next
The payouts keep rising, with Coca-Cola raising its dividend annually for the last 64 consecutive years.
The beverage giant raised the dividend payment from 51 cents per share to 53 cents per share in February of this year. This means another increase could happen between now and next February, likely one to two more cents per share.
In the future, Berkshire Hathaway could collect more than $1 billion annually from Coca-Cola dividends. Each one-cent raise is worth $40 million more in quarterly payments and $160 million annually, based on the 400 million shares held.
While Buffett no longer leads Berkshire Hathaway, his successor, Greg Abel, named Coca-Cola stock one of the company’s core holdings early in his time as CEO.
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