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Here’s How Much Warren Buffett Has Earned From Coca-Cola’s Dividend
By Will Healy – Jan 27, 2023

The stock has hiked its payout annually for 60 years, a factor that greatly benefited investors such as Buffett.

After 35 years, payouts add up with this dividend growth stock.

One of the more notable investments in acclaimed investor Warren Buffett’s career was Coca-Cola (KO 0.53%). Buffett is a longtime fan of its signature drink, a factor that likely helped inspire the 9% stake that his company, Berkshire Hathaway (BRK.A 1.99%) (BRK.B 1.76%), took in the beverage giant in 1988.

But despite the gains made over 35 years, the investment has arguably earned more attention for Buffett as a dividend stock. Investors should capitalize on that attention, as it offers a lesson about the benefits of dividend growth and shows how payouts play a potential role in driving a long-term investment strategy.

Berkshire’s dividend income from Coca-Cola
Berkshire owns 400 million shares of Coca-Cola stock. Consequently, the $1.76 per share annual dividend earns new buyers a cash return of around 2.9%, well above the 1.7% return of the S&P 500.

But both are a pittance of Berkshire’s yield in Coca-Cola. In 2022, Berkshire received $704 million in dividend income from Coca-Cola. On an original investment of $1.3 billion, that amounted to a yearly return of 54% !

That return is so high because Berkshire bought most of its Coca-Cola shares in 1988 and 1989, beginning the purchases soon after the 1987 stock market crash. Moreover, Coca-Cola has maintained a 60-year streak of payout hikes, making it a Dividend King. Hence, those 35 years of payouts have earned Berkshire nearly $10.2 billion in dividend income from this stock!

Putting the Coca-Cola investment into perspective
Although that sounds like an impressive return on a $1.3 billion investment, some factors may discount the significance and appeal of Coca-Cola’s dividend. For one, Berkshire’s stake in Coca-Cola is now worth just over $24 billion. That means that stock price growth drove the majority of Berkshire’s total return in this stock, not dividends.

Investors should also remember that Coca-Cola stock is likely not a buy at this stage. An implicit confirmation of that feeling appears to come from Buffett himself, as Berkshire bought its last stake in the company in 1994. Even then, the dividend could be the only reason Buffett’s team treated this stock as a hold rather than a sell.

The current fcast for the Snowball is £9,120 and the target 10k.

The other two retirement options are

One. A TR plan to buy an annuity

Two. A TR plan to use the 4% rule.

Option one has been dismissed as you have to surrender all your hard earned and the rate you receive on your retirement date is the big unknown.

The current comparison share for the Snowball is VWRP current value £126,822.00

We will use the 4% rate, although recent studies state this figure may be too high, an income of £5,072.00

If we project both figures by a compound growth of 7% for ten years the comparison would be.

The Snowball income of £18,240.00

VWRP £10,144.00

Resilient fund has helped to turn defence into an investment art form

Story by Jeff Prestridge

Investment trust STS Global Income & Growth is not designed to shoot out the lights. Far from it.

It’s a conservative investment approach which has worked so far. Since November 2020 it has generated a return – a mix of capital and income growth – in excess of 35 per cent.

While this is below the average 43 per cent return for its global equity income peer group, senior fund manager James Harries says the £287 million trust is doing exactly what the portfolio was set up to do – steering a steady course through ups and downs. He runs it with colleague Tomasz Boniek.

‘We want STS Global Income & Growth to be a high quality, low volatility trust in the global equity income space,’ says Harries.

‘That means running a concentrated portfolio of exceptional, resilient companies which are capable of generating sufficient income to support growing dividends. We see our core shareholders as having a requirement for income while not wishing to see their capital depleted – that is what we are trying our hardest to deliver.’

STS GLOBAL INCOME & GROWTH TRUST: Resilient fund has helped to turn defence into an investment art form

In terms of income, the trust’s annual dividend is moving in the right direction.

Three years should become four in the next few weeks or so when the trust reports its final quarterly dividend payment for the financial year ending March 31 (dividends paid so far this year total 4.758p).

As far as capital depletion is concerned, it has been far more resilient than its peers recently.

Over the past six months the trust has recorded a gain of 5 per cent compared with the 3.2 per cent loss by the average for its peer group. At other times when markets have declined – for example, at the start of the Ukraine war in 2022 and later in the same year when interest rates rose suddenly– it has proved equally resilient.

The trust is currently invested across 31 companies, with its only exposure to the ‘magnificent seven’ US stocks – Alphabet, Amazon, Apple, Meta, Microsoft,Nvidia and Tesla – being in Microsoft.

STS GLOBAL INCOME & GROWTH TRUST: Resilient fund has helped to turn defence into an investment art form

In recent months the trust has taken stakes in a number of new stocks. These include Spanish IT company Amadeus, UK pest control specialist Rentokil, German tech company Siemens and US sportswear giant Nike.

Harries says: ‘Nike’s shares are a third of the value they were trading at in late November 2021. The company may have to shift some of its production away from Vietnam if Trump’s tariffs remain in place, but it has sufficient pricing power to withstand what the President puts in its way.

‘At the end of the day, it remains a quality business – and that is what I am interested in holding under the bonnet of STS Global Income & Growth.’

STS currently yields 2.72%, so currently of no interest for the Snowball.

How the “Smart Money” Is Playing US Stocks Now (for 9.5% Dividends)

Michael Foster, Investment Strategist

Are US stocks set to lose out to the rest of the world forever ? That’s what the press would have us believe. But we contrarian dividend investors are looking at this from a different angle.

Our strategy? Buy America when the rest of the world is selling.

It’s worked before, and we have every reason to believe it will work now, too. So let’s talk about it—and the best way to position ourselves for US stocks’ next leg up, with a healthy dividend payout on the side.

Press Panics, US Stocks Bounce

It’s funny, but not surprising, that the moment “sell America” became a headline earlier this year, US stocks started to recover. That said, they are still behind the rest of the world, as we can see by the performance of a popular S&P 500 index fund (in purple below) compared to the Vanguard FTSE All-World ex-US ETF (VEU), in orange.

US Stocks Dip, Start to Bounce Back

Note that both US and global stocks fell about the same amount when the Trump administration announced big global tariffs on April 2. But global stocks recovered more quickly in the following days. And then, last week, US stocks started to catch up.

History tells us that they’re likely to do much more than catch up in the long run.

US Stocks Outpace the Rest of the World Over Time

Going back to VEU’s IPO in 2007, the S&P 500 has returned 9.9% per year on average, as of this writing, while VEU returned just 3.9% annualized.

This shows why buying US stocks when they lag is a winning move in the long run. We can see that more clearly when we go back to the last time the world soured on US stocks in favor of foreign alternatives, which was a bit over a year ago in February 2024.

Back then, Reuters wrote, “Investors dumped US shares, bought China in week to Wednesday.” At the time, Chinese stocks—shown in blue below by the performance of the iShares MSCI China ETF (MCHI)—were more than doubling their US cousins (in purple), which were themselves lagging global stocks (in orange) by a bit.

The Last Time America Disappointed

As we can see below by looking at Chinese stocks, that country’s markets did hold their value for the rest of 2024, but US stocks surpassed those of the rest of the world and started to close the gap with Chinese stocks by the end of the year.

US Stocks Take Off, Close in on Chinese Equities

And in the longer run, Chinese stocks trail. If we go back to MCHI’s IPO in 2011, we see that it has badly lagged US and global stocks, being almost flat:

US Still Leads for Long-Term Wealth Creation

So, time and time again we see the same pattern:

1. When US stocks are underperforming, we get a chance to buy them at a discount relative to their global peers.
2. The underperformance might last for a while, but over timespans lasting decades or longer, American assets outperform.

For us long-term investors, then, it makes sense to take advantage of the recent lag in US stocks to buy—and position ourselves for a bigger return over the long haul. One of the best ways to do so is through a closed-end fund (CEF) called the Liberty All Star Equity Fund (USA), which yields a rich 9.5% as I write this.

USA holds well-known US large caps in a diversified portfolio, with Microsoft (MSFT), Amazon.com (AMZN), Visa (V), Capital One (COP) and many others as top positions.

The fund also focuses on firms with strong cash flow, “moats” in their business models that help them fend off competitors, and histories of strong returns. It also “translates” those profits into that huge income stream for investors who buy now.

Moreover, USA (in blue below) has outrun global and Chinese stocks in the last decade.

USA Beats China and the Rest of the World

USA’s big dividend didn’t just hold steady over this period, it grew, as the fund pays out a percentage of its net asset value (NAV, or the value of its underlying portfolio) as dividends.

USA’s Payouts Grow

By investing in USA, we’re getting a huge and reliable income stream that stands the test of time. And now that the market has sold off, there’s an opportunity to buy before we go back to the norm of American outperformance.

Which brings me to the fund’s discount to NAV: As I write this, USA trades around par. That makes it a good trade now. But if you want to maximize the gains you collect in addition to that huge 9.5% dividend, it could pay to wait for the next dip—and the chance to buy at a discount.

Income funds

My core contention for some time has been that UK interest rates are too high. They are punitive, with positive real rates well over the inflation rate. This might be necessary if the UK economy was expanding too fast, but we are far from that happy outcome, with the GDP growth rate well under the long-term average.

We’ve seen UK interest rates come down by a smidgeon, but they could still go a lot lower if inflation fears started receding. That might be a growing possibility post-Trump and his tariffs. However we look at it, the immediate impact of these tariffs on the UK economy will be contractionary, i.e., there’s a chance we could experience a slowdown in growth. Gas prices are also decreasing (a significant issue for UK energy prices) and most businesses have rammed through any price increases they had planned after the increase in labour costs (courtesy of the NI changes).

Crucially, Five-year swap rates—a key metric used by mortgage companies—have started to edge lower and currently stand at around 3.7%. UK 2-year gilt yields have also recently pushed below 4%, though they are now a tad above that level again.

I believe the chances of UK interest rates dropping to 4% or lower more than twice have significantly increased—I would now estimate that probability to be above 50%. If this is the case, it’s reasonable to expect the 5-year swap rate to decrease significantly to around 3%, and the UK 2-year gilt rate to approach 3.5%.

Many investors will intensify their search for income-based investments at these levels, with most attention on UK alternative investment trusts. Because of a massive sell-off in these alternative funds, yields of well more than 8% are very common. That implies that if UK 2-year gilts fall below a 3.5% yield, a portfolio of carefully chosen alternative funds could provide an excess yield of over 5%, i.e. 8.5% minus 3.5%. Crucially, many of these funds are now trading at discounts well in excess of their medium-term average.

Cue the table below, which maps out a model alternative portfolio of five alternative income funds, all of which, in effect, lend money to other businesses. Each of these funds – bar CQS New City High Yield – invests in slightly complex transactions, be they asset-backed securities or infrastructure loans. As an aside CQS invests in relatively simple-to-understand corporate bonds with a higher yield – see below. That makes these funds difficult for most investors to understand, but I think these five funds look compelling for adventurous types. However, some, such as Sequoia and BioPharma, are more compelling than others.

I suggest these fine funds only as a starting point for research, but below I’ve added a quick pen portrait summary of each fund. The usual caveats apply: these funds are complex, pricing can be volatile, bid-offer spreads can be wide and you need to be adventurous enough to do your own research. Most of the funds also trade at chunky discounts to their net asset value.

TwentyFour Income. This well-established, decent-sized fund invests in asset-backed, mortgage-related securities. Its track record is solid if unspectacular, churning out an annualised 8% return since inception, and its yield is a sustainable 9.3%. It recently declared its final dividend of 5.07p, bringing the total for the year to 11.07p (FY24: 9.96p), a record balance and full-year dividend. The company currently pays shareholders 2 pence/quarter, in line with its target for the year, with the final balancing dividend announced after the 31 March year-end. So, what does TwentyFour Income invest in? In straightforward terms, this London-listed fund targets less liquid, higher-yielding UK and European asset-backed securities (ABS). This part of the fixed-income market remains largely overlooked, and fund managers believe it represents attractive relative value.

BioPharma Credit. A truly unusual fund, but one with an excellent track record – and big enough to provide real liquidity for investors. BioPharma lends money mostly to publicly listed life sciences businesses struggling to raise equity funding (pretty much all listed biotechs struggle to raise equity capital) to help fund obvious growth opportunities i.e launching a new suite of drugs or medical products. BioPharma lends the money at decent rates – nearly always in the double digits and then sits senior in the capital structure. Crucially, though it has a fantastic track record of getting its money back – too many loan funds have sunk because of high default rates. Many of BioPharma’s borrowers, by contrast, pay the money back early, because of a takeover. That triggers early repayment fees, which add to the total return. It also helps that BioPharma has a very active discount control mechanism designed to get a discount below 5% as quickly as possible.

CQS New City High Yield. Managed by Ian ‘Marco’ Francis at CQS, this corporate bond fund has a long track record and a very loyal fan base amongst wealth managers. Like its nearest peer Invesco Bond Income Plus, it buys into higher-yielding corporate bonds but is careful about what it buys. Ian has a focus on providing investors with a high dividend yield, achieved through a diversified portfolio of 140 holdings predominately in high yield. Fixed Income represents 75% of assets, with 25% in Convertibles, Equities and Preference shares. Helpfully the fund has traded either at par or at a premium for much of its life.

Fair Oaks Income. This investment is more for experienced investors who understand structured finance, particularly collateralised loan obligations (CLOS). Fair Oaks focuses on debt structures where the riskiest layer, equity, is positioned below a series of risk-rated loans, starting with the safest AAA-rated loans. That sounds risky and in a deep recession it might well prove to be, but because the manager frequently sponsors and manages the pool of loans via a CLO, it understands the risk profile of the borrowers very well. And to date, its returns have been very impressive. Declining interest rates, perhaps because of a slowdown, could be a double-edged sword. It could lower the risk of defaults and prompt more refinancing. Still, it could also imply an impending recession in which those defaults (currently very low) could erupt into a financial crisis. But to date, Fair Oaks has navigated higher rates for a longer environment very well, and this is a hugely popular fund with many wealth managers.

Sequoia Economic Infrastructure. This lending fund invests in infrastructure debt. SEQI’s portfolio is invested across 54 private debt investments (91% of the portfolio) and five infrastructure bonds. 60% of the portfolio comprises senior secured loans, and the portfolio has an annualised YTM of 9.87%, alongside a cash yield of 7.29% (excluding deposits). The weighted average portfolio life is 3.4 years, and the manager reckons that the short duration means that SEQI can take advantage of higher yields in the current rate environment. A few loans have defaulted, which has caused the share price to fall quite a bit in recent weeks – the shares currently trade on a c.17% discount, yielding 9.0%. Wealth managers widely hold the fund and it boasts a very active approach to portfolio valuation, with monthly third-party valuations. I sense that there’s limited downside given the fund’s active buyback policy.

David Stevenson

This article is for educational purposes only. It is not a recommendation to buy or sell shares or other investments. Do your own research before buying or selling any investment or seek professional financial advice.

One bright spot might be income – as share prices move up and down violently, the attractions of a regular income via dividends start to become more attractive. According to Octopus Investments’ bi-annual Dividend Barometer private investors should consider UK small and mid-cap companies for income.

Sticking with that dividend income theme, investment trusts that pay a regular dividend might also be looked on more favourably—there’s a long tail of deeply discounted trusts that have a long track record of paying generous dividends, based in part on strong cashflows and built-up shareholder reserves (which allow investors to smooth out the payout).

The Association of Investment Companies (AIC) has just released a useful list of 26 investment trusts that pay a yield of more than 5% and have not cut a dividend in the past ten years. That includes five trusts from the Renewable Energy Infrastructure sector, with yields ranging from 9.2% to 12.5%

Consistent income payers with yields of more than 5%

Low-volatility funds are providing respite

The focus on dividend income reflects an obvious truth – share prices might shoot up and down, but dividend cheques tend to pay out a stable amount. We’ll come back to that income point shortly, but what about the volatile share price bit of the equation? Is it possible to dial down the share price volatility by investing in shares through a fund like an exchange-traded fund (ETF) that only invests in more defensive, less volatile stocks? The answer is yes, and much of the time it’s a very successful wealth preservation strategy.

A good few years back, there was a sudden eruption of interest in what was called smart beta strategies. It sounds complicated, but it isn’t. Essentially, it’s saying you have two ways of passively tracking the (stock) market. The first is to buy into a tracker following a major index like the S&P 500 and be done with it!

The alternative is to say that the crowd, and thus markets, are not always perfectly efficient and that at some points, the market overindulges some trends (positive momentum stocks) and ignores others (value stocks). This gives rise to various market anomalies, as they are called, which range from value stocks through quality stocks to low-volatility strategies. These strategies all involve using technical and fundamental metrics to spot stocks that might be underappreciated and priced inaccurately by the market.

Taken from an article by David Stevenson

Business capitalvue.topx likeslines@gmail.com 168.228.47.148

It’s interesting to see how timing plays a crucial role in maximizing returns. The chart clearly highlights the potential to double your stake with the right strategy. The current yield of 4.77% and the discount to NAV of 4.3% seem promising for investors. How does the timing of entry and exit impact the overall yield in this scenario?

If we refer back to the chart.

Around the covid low the price was 500p and the dividend was 29p a yield of 5.75%. At this time lots of shares reduced their dividends and that is one reason the Snowball invests mainly in Investment Trusts because they have reserves of your cash, if you are a long time holder, to use to top up the dividends in times of market stress.

At the recent low, marked on the chart, the price 660p and the dividend 35.4p a yield of 5.1%.

Its worth noting at the covid low buying price of 500p the current dividend yields 7%.

The Merchants Trust (MRCH) has been highlighted as having increased its dividend year on year for 41 consecutive years by AIC.

You would have been fearful to buy as the price might continue to fall but with a buying yield of 9% at the low, you could have thought it was time buy.

Nearly achieved the Holy Grail of investing, that you could take out your stake, and earn income at a zero, zilch cost.

Plus income from the dividends re-invested into your Snowball

Current yield 5.31% Discount to NAV 2%

09/04/2025

Merchants Trust PLC on Wednesday said its performance fell only slightly short of its benchmark in its recent financial year, saying recent global market volatility shows the advantages of investing in UK listings.

The investment trust, which dates back to 1889, invests in high-yielding UK large-cap companies.

Merchants Trust said net asset value on January 31, the end of its financial year, was 572.6 pence per share, up 7.9% from 530.9p a year before. NAV total return, including dividend payments, was 13.5%, compared to 17.1% for the FTSE all-share index.

The company said the lag was primarily due to its investments in mid- and small-cap stocks, while recently the market has favoured larger companies. It also said its focus on “high and rising income” from its investments takes priority over total return.

Merchants Trust declared a final dividend of 7.3 pence, bringing the total payout for financial 2025 to 29.1p, up 2.5% from 28.4p in financial 2024. It noted that financial 2025 represented its 43rd consecutive year of dividend growth.

Chair Colin Clark noted that the UK companies in which the trust invests have substantial global exposure, with revenue coming from around the world. “It is important to remember that being UK-listed does not mean a company’s fortunes are tied solely to the UK economy,” he said.

“This is particularly relevant at a time, such as now, when international investors, and sometimes even UK investors, are gloomy about the domestic economic outlook.”

Looking ahead, Clark said, “it remains challenging to predict when investor interest will return to the UK stock market, when UK valuations will re-rate to more ‘normal’ levels.”

He added that Merchants Trust will remain a “patient contrarian investor”. “Our manager believes that many opportunities exist to invest in well-managed, financially strong companies on attractive valuations.”