3 Reasons Investors Should Not Follow Warren Buffett Into Coca-Cola Stock

Motley Fool2022-06-13

Coca-Cola looks like one of the more appealing Warren Buffett stocks at first glance. The 400 million shares owned by his company Berkshire Hathaway make up more than 9% of shares outstanding. Also, ...

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Comments

Tanyl
2022-06-13
Tanyl
KO is still a potential share
OCY
2022-06-13
OCY
Wow
Remotecam
2022-06-13
Remotecam
Looks to like $Coca-Cola(KO)$is the perfect defense stock. While every other major bluechip stock plummeted from hot inflation, Coca cola moved only 0.6% down. That's amazing.
DTnisiel
2022-06-13
DTnisiel
Ok
Desmond669
2022-06-13
Desmond669
Really? Everyone drink coke
jeff123
2022-06-13
jeff123
Agreed

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The 400 million shares owned by his company Berkshire Hathaway make up more than 9% of shares outstanding. Also, ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/06/13/3-reasons-investors-should-not-follow-warren-buffe/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"KO","symbol_name":"可口可乐","start_time":0,"source_url":"https://www.fool.com/investing/2022/06/13/3-reasons-investors-should-not-follow-warren-buffe/","article_id":"2243655146","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2243655146","pubTimestamp":1655123383,"columns":[],"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Buffett bought the stock at a different time, under different conditions.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"KO":"可口可乐"},"translate_title":"投资者不应跟随沃伦·巴菲特买入可口可乐股票的3个理由","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"KO":1},"content_text":"Coca-Cola looks like one of the more appealing Warren Buffett stocks at first glance. The 400 million shares owned by his company Berkshire Hathaway make up more than 9% of shares outstanding. Also, from an original $1.3 billion investment, it is on track to generate $704 million for Berkshire in dividend income alone, a 54% annual return.But despite this success, investors should not consider following Buffett into Coca-Cola stock. Three reasons illustrate why this might turn into a losing proposition for investors.1. Coca-Cola's stock and dividend growthAdmittedly, those looking at the company's stock performance may want to ignore the advice to stay away as Coca-Cola reaches record highs. Over the last 12 months, it logged a 14.8% total return level (including dividends) and outshined the S&P 500's total return of -3% over that time frame. Moreover, Coca-Cola is a Dividend King, a title earned by 60 straight years of payout hikes.However, Coca-Cola has underperformed the S&P 500 on a longer-term basis. Over the last 10 years, Coca-Cola stock logged a total return of about 125% compared with almost 270% for the S&P 500.Also, investors who buy today would get a much smaller cash return of 2.9%. That is nearly double the current S&P 500 dividend return of about 1.6%. Nonetheless, today's investors will probably have to wait decades until they get their original investment back in dividend payouts. Furthermore, the previous dividend hike was about 5%, meaning that the dividend did not increase in real terms when compared with an 8% inflation rate.2. Growth and valuationThe financials may also seem deceptively good at first. In the first quarter of 2022, revenue of $10.5 billion grew 16% year over year. Net income rose 28% to $2.8 billion on slower growth in selling, general, and administrative expenses and lower interest expenses.Nonetheless, Coca-Cola struggled with revenue growth in recent years. While revenue surged by 17% in 2021, investors may forget that revenue peaked in 2012 at just over $48 billion. In 2021, the company brought in $38.7 billion in revenue, a drop of just over 19% over nine years.And despite that decline, Coca-Cola's P/E ratio stands at around 26. That's higher than archrival Pepsico at 22 times earnings or Keurig Dr Pepper at a 21 P/E ratio, a factor that could dampen its appeal with industry investors.3. Warren Buffett is a holder (not a buyer) of Coca-Cola stock todayFurthermore, investors should look closely at Buffett's activity in Coca-Cola stock, or rather, the lack of activity. Despite all the coverage of his Coca-Cola positions, Berkshire Hathaway has logged no trading activity in Coca-Cola stock since 1994.Buffett bought Coca-Cola under different conditions. His first purchase of Coca-Cola stock took place in 1988, soon after the 1987 stock market crash. That year, he purchased almost 226.8 million split-adjusted shares for about $592.5 million. He raised that stake to a split-adjusted 373.6 million shares the next year and took his share count to a split-adjusted 400 million in 1994. But over the last 28 years, his share count has only changed when Coca-Cola stock split, meaning dividend collection was the extent of Buffett's activity in Coca-Cola during that time.Making sense of Buffett's Coca-Cola positionEmulating Buffett's Coca-Cola investment appears to make little sense to new investors. While the 2.9% dividend yield is above average, several S&P 500 stocks and real estate investment trusts (REITs) offer higher yields on their payouts. Also, many dividend stocks sell at a lower P/E ratio than Coca-Cola and have not suffered long-term revenue declines.If investors can find stocks that pay high-yielding, growing dividends at a discount, perhaps their payout returns will someday grow above 50%, but they should probably look elsewhere.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9052348368,"gmtCreate":1655130579454,"gmtModify":1676535567030,"author":{"id":"4087109808120260","authorId":"4087109808120260","name":"Tanyl","avatar":"https://static.tigerbbs.com/174329973340cf0f5b68791ee5b08afd","vip":1,"crmLevel":9,"crmLevelSwitch":1,"idStr":"4087109808120260","authorIdStr":"4087109808120260"},"htmlText":"KO is still a potential share","listText":"KO is still a potential share","text":"KO is still a potential share","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052348368","repostId":2243655146,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9052385741,"gmtCreate":1655127293183,"gmtModify":1676535566095,"author":{"id":"3579472950975074","authorId":"3579472950975074","name":"OCY","avatar":"https://community-static.tradeup.com/news/7cb8744530addae1ce9dcac8bfcdb8d7","vip":1,"hat":"https://static.tigerbbs.com/50a4c8d97279fa9f8f1fa9749a6bdff4","crmLevel":9,"crmLevelSwitch":1,"idStr":"3579472950975074","authorIdStr":"3579472950975074"},"htmlText":"Wow&nbsp;","listText":"Wow&nbsp;","text":"Wow","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052385741","repostId":2243655146,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9052388925,"gmtCreate":1655126621667,"gmtModify":1676535566010,"author":{"id":"4093854476996450","authorId":"4093854476996450","name":"Remotecam","avatar":"https://community-static.tradeup.com/news/f856a0a30bd0fa23a086fc678014e48b","vip":1,"crmLevel":6,"crmLevelSwitch":1,"idStr":"4093854476996450","authorIdStr":"4093854476996450"},"htmlText":"Looks to like <a href=\"https://ttm.financial/S/KO\">$Coca-Cola(KO)$</a>is the perfect defense stock. While every other major bluechip stock plummeted from hot&nbsp;inflation, Coca cola moved only 0.6% down. That's amazing.","listText":"Looks to like <a href=\"https://ttm.financial/S/KO\">$Coca-Cola(KO)$</a>is the perfect defense stock. While every other major bluechip stock plummeted from hot&nbsp;inflation, Coca cola moved only 0.6% down. That's amazing.","text":"Looks to like $Coca-Cola(KO)$is the perfect defense stock. While every other major bluechip stock plummeted from hot inflation, Coca cola moved only 0.6% down. That's amazing.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052388925","repostId":2243655146,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9052389639,"gmtCreate":1655126291821,"gmtModify":1676535565972,"author":{"id":"3576874199621356","authorId":"3576874199621356","name":"DTnisiel","avatar":"https://community-static.tradeup.com/news/25e0d3ec95b007ac9005d11253fa809f","vip":1,"hat":"https://static.tigerbbs.com/b0a2963eb37c60c5d6d4a8dbcd266952","crmLevel":6,"crmLevelSwitch":0,"idStr":"3576874199621356","authorIdStr":"3576874199621356"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052389639","repostId":2243655146,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9052313123,"gmtCreate":1655124859362,"gmtModify":1676535565694,"author":{"id":"3562118563279867","authorId":"3562118563279867","name":"Desmond669","avatar":"https://static.tigerbbs.com/e2484115c94d3471cb46f20ea7598b4a","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3562118563279867","authorIdStr":"3562118563279867"},"htmlText":"Really? Everyone drink coke&nbsp;","listText":"Really? Everyone drink coke&nbsp;","text":"Really? Everyone drink coke","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052313123","repostId":2243655146,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9052319910,"gmtCreate":1655124705130,"gmtModify":1676535565683,"author":{"id":"3578111079453218","authorId":"3578111079453218","name":"jeff123","avatar":"https://static.tigerbbs.com/d2c71145c4a9a4565a59fc5476086738","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3578111079453218","authorIdStr":"3578111079453218"},"htmlText":"Agreed","listText":"Agreed","text":"Agreed","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052319910","repostId":2243655146,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":52,"commentSize":8,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2243655146"}