Warren Buffett’s Berkshire Hathaway is generating substantial annual yields from three key holdings: Coca-Cola, American Express, and Moody’s. Buffett’s secret to these supercharged yields is remarkably simple: patience. Coca-Cola has been a fixture in Berkshire Hathaway’s portfolio longer than any other stock.
Buffett’s company has been a shareholder since 1988, with a cost basis of $3.2475 per share. Coca-Cola has raised its dividend for 62 consecutive years and currently offers $1.94 annually, translating to a 60% yield relative to its cost basis. Coca-Cola’s global reach and consistent demand for its beverages ensure steady cash flow, making it a reliable performer.
American Express is another long-term holding in Berkshire Hathaway’s portfolio. Berkshire has held this stock since 1991, with a cost basis of about $8.49 per share.
Buffett’s formula for high yields
The current payout of $2.80 per share per year equates to a 33% yield relative to cost for Buffett’s company. Financial stocks like AmEx benefit from economic expansions that outlast downturns, and AmEx’s focus on high-earning cardholders ensures stable income regardless of economic conditions. The third key holding is Moody’s, a company Berkshire has invested in since its spin-off from Dun & Bradstreet in 2000.
Over time, Moody’s annual payout has grown to $3.40 per share. With a cost basis significantly lower, Buffett’s company is netting a 34% yield relative to its cost. Moody’s has benefited from both low interest rates in the past and the demand for risk management solutions in the current high-interest rate environment.
Its Analytics segment, which assesses risk management and compliance solutions, has been a significant growth driver recently. Patience and strategic long-term investments in dividend-paying companies have allowed Warren Buffett and Berkshire Hathaway to generate substantial yields, showcasing the effectiveness of a disciplined, informed investment strategy.
