Why Coca-Cola Is a Top Dividend Pick Today

In Warren Buffett’s recent letter to shareholders, the Oracle of Omaha noted his preference to stick with some of the longest-term holdings in his portfolio.

Indeed, any investor who buys a stock at a relatively low cost basis and sees it rise over the years is likely to be overcome by a large tax bill at the end of the day. Buffett’s view has always been to limit the tax burden on his corporation, and therefore his shareholders, by being a long-term shareholder in the companies he buys.

The Coca-Cola Company (NYSE:KO) has been one of the staples of Buffett’s portfolio for years. This soft drink maker has relied on its world-class brand and management team to continue to generate growth, despite its size.

As companies get larger, top- and bottom-line growth can become more elusive. Coca-Cola’s ability to target new markets, and retain its position as one of the top brands globally in most countries, is impressive.

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Coke has been generous in returning capital to shareholders via dividends over the years, raising its dividend on a pretty consistent basis. Today, investors considering Coke can pick up a 3.4% yield, which is relatively juicy when one considers where bond yields are at today.

I think Coke’s brand provides investors with a rock-solid moat the likes of which are rarely seen in most industries. Accordingly, I’m going to side with Buffett on the benefits of owning such a company long-term.

Invest wisely, my friends.