No. of Recommendations: 5
quick question, how much money has Berkshire received collecting dividends from Coke throughout their entire ownership of the stock ?
Grok tells me that Berkshire bought the shares between 1988 and 1994 at an average (split-adjusted) price of $3.25, and they have generated dividends worth $10.2b, or $25.50 per Coke share.
This seems like a lot, doesn’t it? But is it a good return, compared to alternatives? One way of answering this is to compare the total return of the Coke investment (capital appreciation and income, before taxes) with Berkshire’s overall return.
Grok tells me that the Coke position has provided a total annual return of 11.4%, over an average holding period of 34 years. In comparison, Berkshire’s return since 1991 has been 14.6%. So the return of the Coke investment, despite the impressive dividend return on the original price, has actually been a drag on Berkshire’s performance.
This was probably not always the case – I am guessing that it provided a great return up to 2000 or so. But the fact that the share price has practically not changed in 25 years, combined with Buffett’s favourite holding period (forever), has actually turned this brilliant investment into one that is now sub-par.
