Buffett Collects A 50% Dividend Yield… From The Coca-Cola Company (KO)?!

Page 1 of 2

Not many people know that Warren Buffett collects a 50% dividend yield on his shares of The Coca-Cola Company (NYSE:KO).

That’s because it seems impossible. If you or I were to buy shares today, we’d earn a yield of less than 3%.

How does Buffett do it? Did he cut a behind-closed-doors deal with the legendary soft drink maker? Did he receive special dividends? To get a yield that high, you might even be tempted to think he did something unethical to get it.

But actually, it’s none of the above. The answer is much simpler than you might think.

He uses a simple tool that many successful investors use. It’s one you can use today to potentially earn yields as high as 10%, 20% or more on a handful of your investments in just a few years.

Let me show you how it works…

When most investors want a big dividend check, they look at stocks with the highest yields. They think bigger equals better.

To some extent they’re right. Clearly, a higher dividend puts more cash in your pocket.

But you also need to consider a company’s dividend growth — and the likelihood it will continue that growth going forward. Given enough time, this can turn a lower-yielding stock into an even bigger income producer than some of the highest yielders on the market — and with a lot less risk.

Warren BuffettSavvy investors know this and use it to their advantage. When Buffett bought shares of The Coca-Cola Company (NYSE:KO) in 1988, it paid less than 8 cents per share annually in dividends, yielding a modest 4%. But since then the company has grown its dividend by an incredible 1,300%, giving Buffett more than a 50% yield on his original investment today.

Fortunately, thanks to the “dividend vault” phenomena — which StreetAuthority co-founder Paul Tracy originally explained in this essay — investors have a chance to do exactly what Buffett did — earn outrageously large yields by owning solid companies with large cash hoards that will grow their dividends by a sizeable amount over time.

Let me explain…

You see, starting from the financial crisis of 2007-2008, corporate America has been in a frenzy to hoard cash to protect their businesses from the worst. Over the five years following the crisis, many companies were still not seeing the demand that they wanted from consumers, so they just kept hoarding more cash.

Today, corporations in America hold close to a record $1.7 trillion worth of cash in the bank — an amount larger than the GDP of 180 countries. Because the economy is still on uncertain ground, many of these companies will choose to only use a small amount of this cash to expand their business. Instead, they’ll likely use most of it to reward shareholders in the form of dividends and share repurchases.

The companies most likely to do this are mature, steady growing businesses — companies like The Coca-Cola Company (NYSE:KO) and Microsoft, for example. In fact, we’ve identified 13 companies that are likely to use their billion-dollar cash hoards — or their own personal “dividend vaults” — to reward shareholders.

We expect these “dividend vault” companies to be some of the fastest dividend growers on the market over the next 10 years. And that could easily lead to double-digit yields in just a few short years for investors who buy companies like these today.

Take “Dividend Vault” stock Cisco Systems, Inc. (NASDAQ:CSCO) for example. It has a $47 billion “vault” — more than twice the size of The Coca-Cola Company (NYSE:KO)’s cash reserves.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!