In 1988, Warren Buffett made a strategic investment in Coca-Cola (KO) through his company Berkshire Hathaway (BRK.A)(BRK.B). Little did he know, this would turn out to be an incredibly profitable decision. For those who invested $1,000 in Coca-Cola stock at that time, the returns today are astonishing.
Back then, Coca-Cola shares were trading at approximately $2.45 each, after adjusting for stock splits. With $1,000, an investor could have bought around 408 shares. As of 2023, the stock price has surged to about $66 per share. Calculating the gains, those 408 shares would now be worth approximately $26,928, not accounting for dividends.
One of Coca-Cola’s strengths as an investment is its consistent dividend payments. As a dividend aristocrat, Coca-Cola has raised its dividend annually for over 50 years. If dividends were reinvested over the past 35 years, that initial $1,000 investment would have grown to an impressive $67,641. The company currently boasts a 2.86% dividend yield, with an average range of 3% to 4%.
Warren Buffett’s investment in Coca-Cola was a calculated bet on a brand with global reach, consistent demand, and strong pricing power. His initial $1 billion investment has since ballooned into a multi-billion-dollar holding for Berkshire Hathaway, thanks to both stock appreciation and dividends.
Buffett’s Coca-Cola investment exemplifies the long-term potential of blue-chip stocks, particularly those with reliable dividends. An everyday investor who followed his lead with a modest $1,000 investment would now possess a small fortune. This demonstrates the power of investing in stable, dividend-paying companies over the long term.
For those seeking to build wealth, Buffett’s Coca-Cola story is a testament to the importance of patience and selecting the right companies. It illustrates that a single strategic decision can yield benefits for decades, especially in industries that remain resilient through economic changes and maintain a strong market presence.
