Warren Buffett, through Berkshire Hathaway, earns hundreds of millions of dollars in annual dividends from his Coca-Cola (KO) investment — a position he originally built between 1988 and 1989 for roughly $1.3 billion.
Berkshire owns 400 million shares of Coca-Cola, a position that has remained essentially unchanged for over three decades. Today that stake is worth tens of billions of dollars, while throwing off a steady, predictable annual dividend income stream.
Coca-Cola has raised its dividend for more than 60 consecutive years, qualifying it as a "Dividend King." Buffett's yield on cost — the dividend he now collects each year measured against his original 1988 purchase price — is roughly 60%, meaning he gets back the equivalent of his entire original investment in dividends roughly every two years.
Despite the massive market value of his Coca-Cola shares, Buffett has consistently refused to sell. The dividends fund other Berkshire Hathaway acquisitions and investments, while the underlying business continues to compound. It's a textbook example of long-term, dividend-growth value investing.
Buffett's Coca-Cola story showcases the power of buying high-quality businesses at attractive prices, holding for decades, and letting dividend growth and compounding do the heavy lifting. Patience and conviction outweigh market timing.
Note: Dividend amounts and shareholding data are based on public filings and are updated quarterly.