Key facts
- A $1,000 investment in Coca-Cola 30 years ago would be worth approximately $9,030 today.
- The stock portion of the investment would be worth about $4,270.
- Dividend payments over the last 30 years contributed $4,760 to the total return.
- Coca-Cola has increased its dividend payouts for 63 consecutive years.
- A $1,000 investment in the S&P 500 over the same 30-year period would be worth approximately $20,000.
- Coca-Cola's current dividend yield is 2.9%, compared to the S&P 500 average of 1.2%.
A $1,000 investment in Coca-Cola stock made 30 years ago would have grown to approximately $9,030 today, primarily due to substantial dividend payments. The stock itself would be worth around $4,270, with the remaining $4,760 coming from cumulative dividends over the three decades.
Coca-Cola, a company trading since 1919 and known for its iconic soda and over 200 beverage brands, is considered a mature company. Warren Buffett's Berkshire Hathaway began accumulating shares in the late 1980s and has held its 400 million shares without buying or selling since 1994. The company is recognized as a Dividend King, boasting 63 consecutive years of dividend payout increases.
Despite Coca-Cola's performance, an equivalent investment in the S&P 500 over the same 30-year period would have yielded approximately $20,000, more than double the return of Coca-Cola. However, the report notes that Buffett likely invested in Coca-Cola before this 30-year timeframe, suggesting his overall returns may have outpaced the S&P 500. Berkshire Hathaway has not reinvested dividend proceeds into Coca-Cola shares since at least 1994, and with a current price-to-earnings ratio of 24, it's unlikely to be considered a value play by Berkshire at current levels.
For income-focused investors, Coca-Cola's current dividend yield of 2.9% remains attractive, significantly exceeding the S&P 500's average yield of 1.2%. However, the report concludes that unless an investor's sole focus is dividend income, Coca-Cola stock may not be the most suitable choice for investing cash, given its underperformance relative to the S&P 500 over the last three decades.