And the company has still been able to pay and even bump up its dividend over the same time period. For each $1,000 of stock owned over the last 13 years, those quarterly payments have added up to $2,200; more than double the initial investment, and that’s not even considering the gain in the stock value itself.
International Business Machines Corp. (NYSE:IBM) has been successful in reinventing itself by getting out of the PC industry and into successful business-to-business services, such as “Big Data” and specialized software tools. It is the most innovative business around, at least when you consider that it received the most patents of any company since 2000. That can only lead to future growth and increased returns.
Tide, Crest and Pampers
The Procter & Gamble Company (NYSE:PG) sells things people need on a daily or weekly basis: laundry detergent, toothpaste, deodorant, diapers, shaving cream, etc.
Tons of cash flow in from those purchases and are used to fund the company’s ever-increasing dividend payments. Since 1956, Procter & Gamble has hiked its disbursement every year. Recently the board of directors announced that its next quarterly dividend will be 8% larger. That keeps up with inflation. Yes, The Procter & Gamble Company (NYSE:PG) is good for a retirement income account.
The company is innovative too. Last year, it revolutionized the laundry detergent business by developing the single-shot Tide Pod packet. The result was growth in the high-end of the market, which favors The Procter & Gamble Company (NYSE:PG) over its competitors. This and other inventions throughout the years have allowed the company to expand. I wouldn’t expect anything less in the future.
Conclusion
So we didn’t get an answer to a burning question at the Berkshire annual meeting; we still don’t know who will be the next CEO. However, if investors listened carefully at the shareholder’s meeting, they should have been able to gather a few tidbits of knowledge on how Warren Buffett and Charlie Munger pick stocks.
Maybe the next The Coca-Cola Company (NYSE:KO), International Business Machines Corp. (NYSE:IBM) or The Procter & Gamble Company (NYSE:PG) can be identified using the duo’s well-honed process of finding good value for the money and holding onto a stock as long as it keeps returning that value to shareholders through buybacks and dividend increases, in addition to price appreciation.
In fact, now that he is on Twitter, maybe Warren Buffett will parse out investing wisdom on a more regular basis so that we don’t have to wait until next year’s meeting.
The article 3 of Warren’s Favorite Stocks: IBM, Coca-Cola, and Procter & Gamble originally appeared on Fool.com and is written by Mark Morelli.
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