💸 $816M... for Doing Nothing
Today is Dividend Day.
The series where I teach you 5 things about dividend investing in less than 5 minutes.
1️⃣ Coke Pays Buffett More Than Its CEO
James Quincey runs Coca-Cola - he’s the CEO and Chairman of the Board.
Last year, Coca-Cola paid him about $24 million. That includes stock awards and bonuses.
Not bad.
But that’s peanuts compared to what Coke pays Warren Buffett.
Berkshire Hathaway owns 400 million shares of Coca-Cola, each one pays $2.04 a year in dividends.
Buffett receives $816 million a year. Just in dividends. For doing nothing.
Coke’s CEO works all year to earn $24 million.
Buffett makes 30 times more… sitting on his hands.
It’s much better to own a great business than to work for one.
2️⃣ Buffett’s Life is a Study of Compounding
He’s 94. Worth $132 Billion.
He didn’t build a business, he just held the right ones.
Like Coca-Cola - he bought it in 1988… and never sold.
The dividends started small, now they pay him $816 million a year.
That’s compounding.
It’s not exciting. It’s not fast. But it works.
Buffett’s life is proof.
3️⃣ An Investing Quote
Most people think compounding is about math.
It’s not.
It’s about behavior. About patience. About not screwing it up.
Buffett mastered it. And so did his right-hand man, Charlie Munger, who once put it this way:
“Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things.”
-Charlie Munger
4️⃣ Some Interesting Dividend Data
WisdomTree is an investment firm that creates exchange-traded funds (ETFs).
They focus on income and dividend strategies, helping investors earn money through regular payouts.
They published some interesting data on dividends around the world recently.
The image below is from the report and shows the Shareholder Yield of the market sectors of the S&P 500.
Click the image to go to the report.
5️⃣ Example of a Dividend Stock
We’ll use another one of Buffett’s Dividend Stocks for our example today.
American Express (AXP) is a financial services company best known for its credit cards and payment solutions.
They focus on premium customer service and rewards programs, helping customers earn points for travel, dining, and other purchases.
- Profit Margin: 16.6%
- Forward PE: 18.9x
- Dividend Yield: 1.4%
- Payout Ratio: 20.4%
That’s it for today!
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Used sources
- Interactive Brokers: Portfolio data and executing all transactions
- Finchat: Financial data