This shares to buy as passive income it has been in the portfolio for many years Warren Buffett. The billionaire investor Berkshire Hathaway has always researched stocks with dividends his “secret recipe” to obtain extraordinary returns over decades.
In this article we will look at one of Buffett’s favorite stocks to generate passive income.
Although its dividends are no longer growing as fast as in previous years, this stock still offers a stable and attractive yield for investors looking for passive income. Let’s look at the reasons why this NYSE giant should be considered a solid choice for your portfolio.
Buffett prefers dividends
Warren Buffett is known for being a great advocate of investing in stocks with dividends. He recently highlighted the importance of selecting this type of company in a message to shareholders. Among the many actions in which he was a trusted shareholder, stands out Coca Cola, in which he had shares for many years. Coca-Cola’s dividend yield has risen well above 3%making it an attractive option for those seeking passive income.
When Buffett began investing in Coca-Cola, annual dividend payments from that investment amounted to $75 million in 1994. Today, these dividends rises to more 700 million dollars. This huge increase shows how powerful long-term investing in dividend-producing companies is. And Buffett has no plans to sell his shares, as he believes passive income will continue to grow over time.
Coca-Cola grows over time
But Coca Cola It’s not just a stock for dividend seekers. The company continues to demonstrate strong capital growth. In the third quarter, sales of organic products grew by 11%, highlighting an increase in market share in the takeaway beverage sector.
Coca-Cola has raised its growth prospects for the second consecutive quarter at the end of October.
Brands like Coke Zero are gaining popularity among consumers, as are the beverage titan’s less traditional franchises in areas like teas and energy drinks. By dominating several global beverage niches, Coca-Cola has a solid foundation for future growth. This is confirmed by CEO James Quincey, who stated: “Our leading portfolio of brands… positions us to win in the market today and lays the foundation for the long term”.
Coca-Cola, financial data and dividend
HE Financial data of Coca-Cola speak clearly. a margin of operating profit of the 30% sales is a very solid indicator.
Coca-Cola’s recent financial results confirm its solidity. In the third quarter the company exceeded analysts’ expectations. Iadjusted earnings per share It was from 74 cents, compared to the expected 69 cents. Revenue reached $11.91 billion, exceeding the expected $11.44 billion.
The third quarter saw an increase in net income attributable to shareholders to $3.09 billion, or 71 cents per share, compared to $2.83 billion, or 65 cents per share, a year earlier. These results show that Coca-Cola remains strong cost effectiveness despite rising raw material costs and prices.
The growth of sales has been solid, with an increase in8% to 11.91 billion dollars. This figure does not include the impact of acquisitions and divestitures, but the organic growth rate was even more impressive: 11%.
He operating cash flow of 9 billion dollars in the last nine months, an increase of 10% compared to the previous year, highlights the financial strength of the company.
This strong cash flow allowed Coca-Cola to increase its dividend for 60 consecutive years, the last increase being 3%. Buying shares today allows you to obtain an approximate return of 3.4% per year. This yield, combined with consistent dividend growth, makes investing in KO attractive to those seeking passive income.
Is the price of Coca-Cola too high?
Coca Cola No is more a low cost title as it was in the early 90s, but it’s not too overrated either. Currently, you can buy shares for less than 6 times sales and annual 23 times earnings. These values are near three-year lows, suggesting the stock may still offer growth opportunities.
While the stock’s short-term performance can be affected by factors such as economic growth rates, consumer spending patterns, and interest rates, income-seeking investors can look past this volatility. Coca-Cola has a strong market leadership position, consistent profits, strong cash flows and valuable global brands.
As long as these factors continue to translate into increased sales over time, the stock should continue to deliver results. positive returns quarterly.
Despite price correction since the beginning of the year, Coca-Cola’s valuation remains slightly above average consumer goods sector. However, it is important to note that the current market value still offers a significant premium margin, although lower than historically.
The information and considerations contained in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since only he knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation of public savings.