You Won’t Believe How Much Money Berkshire Hathaway Gets From Coca-Cola Dividends

Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) built up a position in Coca-Cola (NYSE: KO) stock between 1991 and 1994, and today, it owns 9.3% of the company, a position worth more than $31 billion.

Coca-Cola is the classic Dividend King, with an almost unbeatable track record of raising its dividend for 63 years consecutively. That’s more than six decades that span the gamut of stock market and global events, from wars and hyperinflation to a global pandemic and market crashes. It’s as resilient as they come.

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The dividend typically yields somewhere around 3%, which is a high yield. While that’s attractive to new investors, you can see how the raises and reliability matter a lot more than you might think from seeing Berkshire Hathaway’s yield on its cost basis.

Image source: Getty Images.

Berkshire Hathaway accumulated 400 million shares of Coca-Cola stock in its buying spree, spending about $1.3 billion in total. Today, that position is worth nearly 24 times that amount. While impressive in itself, Berkshire Hathaway has gotten even more out of that investment in dividends.

The cost basis per share of the investment is $1.3 billion divided by 400 million, or $3.25. The annual dividends per share are $2.12 since it raised the dividend for the 64th time in February, which means the yield on cost basis is 65% and Berkshire will get $848 million in dividend payments in the coming year. So long as Berkshire Hathaway holds on to its Coca-Cola shares, it receives an ever-increasing amount of money from the investment annually, which is getting closer to getting back the full amount of its investment. At some point, the total dividends should exceed the entire cost of the initial investment every year. That’s the power of buying excellent dividend stocks and holding forever.

Before you buy stock in Coca-Cola, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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