Dividends are a favorite of Warren Buffett. Even though he has never wanted Berkshire Hathaway ( BRK.A 0.02%) ( BRK.B -0.09%) to distribute one, the famous investor often highlights the dividend payments Berkshire collects from its investments. In fact, nearly every company in Berkshire’s holdings pays a dividend.
Some of these stocks bring in far more income than others. Buffett is earning an astonishing yield of close to 63% from one Dividend King. And yes, that number is accurate.
Image source: The Motley Fool.
The reason Buffett’s dividend yield is so high
The Dividend King in question is The Coca-Cola Company ( KO 0.07%). You might be surprised that Buffett enjoys a yield of nearly 63% while Coca-Cola’s current forward yield is just 3%. There’s a straightforward explanation for this.
Buffett originally bought shares of Coca-Cola in 1988. Over the following years, he increased Berkshire’s position, ultimately investing about $1.3 billion to secure a sizable portion of the beverage and snack giant.
Although Buffett hasn’t always kept stocks forever as he likes to say, he has certainly done so with Coca-Cola. It’s his longest-held stock, and Berkshire still owns 400 million shares, making it the fourth-largest position in the portfolio.
Those 400 million shares pay out $816 million in dividends to Berkshire each year. When you divide this annual payout by the original $1.3 billion investment, you get an effective dividend yield of about 62.7%.
The key to Buffett’s extraordinary dividend yield is a long-term investment approach. Coca-Cola’s consistent annual dividend increases since Buffett’s first purchase have also played a significant part.
Coca-Cola has rewarded Buffett in more ways than one
Coca-Cola hasn’t just provided Buffett with generous dividends over the years. The stock has also delivered remarkable total returns.
Since early 1988, Coca-Cola’s share price has soared by nearly 1,300%, including four stock splits. Notably, that figure doesn’t count dividends. If you factor in reinvested dividends, the total return exceeds 3,100% over the same period.
KO data by YCharts
Coca-Cola has also given Buffett something else: enjoyment. At Berkshire’s annual meeting in May, the billionaire lifted a can of Coke and remarked, “At 94, I’ve been able to drink whatever I want.” (For reference, Buffett celebrated his 95th birthday on August 30, 2025.)
In previous interviews, Buffett has shared that he typically drinks five cans of Coke a day. In 2023, he commented, “I believe happiness greatly impacts longevity. And I’m happiest when I’m drinking Coke or eating hot fudge sundaes or hot dogs.”
Should you buy Coca-Cola stock now?
Although Coca-Cola is clearly among Buffett’s preferred holdings, he hasn’t added to the position in many years. So, is Coca-Cola a good buy at this point? The answer really comes down to your investment strategy.
If you’re focused on growth, Coca-Cola may not be especially appealing. The stock has underperformed the S&P 500 ( ^GSPC -0.13%) in recent years. Analysts on Wall Street also expect Coke’s earnings to increase at a slower pace than the S&P 500’s in 2025 and 2026.
If your approach is value investing, as Buffett’s often has been, Coca-Cola may not top your buy list either. Its forward price-to-earnings ratio sits at 21. While that isn’t especially high, it probably isn’t low enough to entice bargain hunters.
However, for those seeking reliable income, Coca-Cola is a very attractive option right now. The company’s Dividend King status and solid yield make it a dependable source of growing dividends for income investors—just as it has proven to be for Buffett for nearly forty years.
