Berkshire Hathaway, led by Warren Buffett, is achieving impressive annual returns from three primary investments: Coca-Cola, American Express, and Moody’s. The cornerstone of Buffett’s approach to these enhanced returns is surprisingly straightforward: patience. Among all the stocks in Berkshire Hathaway’s portfolio, Coca-Cola has maintained its presence the longest.
Buffett’s firm has owned shares since 1988, with an original acquisition price of $3.2475 per share. For 62 consecutive years, Coca-Cola has increased its dividend and currently pays out $1.94 annually, resulting in an extraordinary 60% yield based on its initial cost. The extensive global presence of Coca-Cola and the steady demand for its products provide a reliable cash flow, affirming its status as a dependable investment.
American Express stands as another enduring investment within Berkshire Hathaway’s collection. The company has been invested in this stock since 1991, with a purchase price around $8.49 per share.
Buffett’s strategy for generating high yields
Currently, the annual dividend is $2.80 per share, yielding 33% based on the original cost for Buffett’s firm. Financial institutions like American Express thrive during economic recoveries that extend beyond recessions. Additionally, American Express prioritizes affluent cardholders, ensuring consistent revenue irrespective of economic fluctuations. Another significant investment is Moody’s, which Berkshire has backed since its separation from Dun & Bradstreet in 2000.
Over the years, Moody’s dividend payout has risen to $3.40 per share. With a much lower cost basis, Buffett’s company enjoys a 34% yield relative to its investment. Moody’s has experienced growth due to historical low interest rates and the current demand for risk management solutions in a high-interest rate landscape.
Recently, its Analytics division, dedicated to risk management and compliance, has become a critical growth catalyst. Warren Buffett’s strategy of patient and thoughtful long-term investments in dividend-yielding firms has enabled him and Berkshire Hathaway to realize significant yields, demonstrating the value of a disciplined and knowledgeable investment approach.
