Coca-Cola: A Favorite Stock of Warren Buffett

Last Updated: 20. Februar 2024By

As a regular reader of the closing bell, you know: Coca-Cola is a cult – even on the stock market! Founded 132 years ago, the soft drink manufacturer now sells its beverages in over 200 countries and owns 17 drink brands, each with annual sales of over $1 billion.

This makes Coca-Cola the undisputed number one among beverage manufacturers, which helped the company to implement price increases in a more inflationary environment in recent months. These, in turn, led to good numbers despite difficult conditions.

Good quarterly figures and a positive outlook Coca-Cola increased its corporate revenue in the fourth quarter of 2023 by 7% to $10.85 billion. The beverage giant reports a profit of $1.973 billion. This corresponds to earnings per share of $0.46. In the same period last year, the profit and earnings per share were slightly higher.

However, the adjusted profit for the fourth quarter of 2023 was higher than the profit of 2022. This met analyst expectations. For 2024, the company expects organic revenue growth in the range of 6 to 7%. Adjusted earnings are expected to increase by 4 to 5% per share.

One of the world’s most valuable brands While consumer behavior has recently had a negative impact on Coca-Cola in established markets such as Europe and North America, the company benefits from the fact that people in emerging Asian countries are increasingly reaching for the company’s beverages from Atlanta.

The big advantage: Coca-Cola is one of the world’s most valuable brands, but above all one of the most well-known. The brand has almost 100% penetration. Almost everywhere in the world, consumers know what to do with the name and are familiar with the products.

Coca-Cola is the ultimate brand in the beverage market, which is a significant competitive advantage over the competition. Coca-Cola is fighting against the slow growth in its core business of sugary soft drinks by focusing on new markets and investing in healthier products.

Warren Buffett is a Coca-Cola fan The combination of a simple and consistently successful business model has attracted a famous investor several decades ago. In his „Letter to Shareholders,“ Buffett calculated a few months ago: Overall, his holding company Berkshire Hathaway bought $1.3 billion in Coca-Cola shares in the 1980s and 1990s.

Currently, Buffett holds over Berkshire Hathaway 400 million shares of the beverage manufacturer. This makes the investment in Coca-Cola the fourth-largest position in Buffett’s investment company Berkshire Hathaway’s stock portfolio.

Coca-Cola has regularly increased its dividend for 62 years Coca-Cola rewards its loyal shareholders: The Atlanta-based beverage giant pays out four dividends per year, like most US companies. The recipe for success for shareholders: The annual dividend is steadily increased.

In the past 62 years, the company has raised the dividend every year! With this series, the soft drink manufacturer is one of the best dividend payers in the world. Shareholders benefit from the many small dividend increases.