The Coca-Cola Company (KO), Berkshire Hathaway Inc. (BRK.B): Why Dividend Investors Should Steal Buffett’s Stock Picks

New innovation and emerging market growth leads Coca-Cola to a future of long-term growth. The company’s Freestyle machines are a major differentiator. Customers can select whatever The Coca-Cola Company (NYSE:KO) product they desire from the machine, mix and match their choices if desired, and select from more than 100 different sodas and soft drinks with a single tap on a touch screen display. The high initial cost of the machine ensures that new users of the freestyle product remain long-term customers of Coca-Cola’s restaurant business.

The Coca-Cola Company (NYSE:KO) has slowly reduced its share count while paying an impressive dividend to investors. It maintains a 50%-60% payout ratio, which has enabled the company to grow dividends paid per share from $0.44 per split-adjusted share to a current quarterly dividend worth $1.12 per year in just the past 10 years.

Latching onto dividend growth stocks

Dividend growth stocks can provide extraordinary value to investors over the long haul. A solid dividend payout ratio combined with well-timed stock repurchases makes for a rapidly increasing net worth for investors and businesses alike.

These two names above, Wells Fargo and The Coca-Cola Company (NYSE:KO), are brands you can stick with for the long haul. Over time, their per-share dividends should grow alongside gradual improvement in earnings per share. That makes for an excellent long-term income machine, as dividends are paid out each quarter and irregular stock repurchases make room for larger dividends per share.

Steal these ideas from Buffett. Over their history, these companies have only paid out more and more of their earnings to owners, making them some of the best-performing stocks in Wall Street history.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway Inc. (NYSE:BRK.B), Coca-Cola, and Wells Fargo. The Motley Fool owns shares of Berkshire Hathaway and Wells Fargo. ordan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Why Dividend Investors Should Steal Buffett’s Stock Picks originally appeared on Fool.com and is written by Jordan Wathen.

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