Warren Buffett's "Big Four" Investments Will Be Printing Cash For Years to Come
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A few days ago Warren Buffett released his 2011 annual letter to Berkshire Hathaway shareholders, a must read for any investor. If you haven't had a chance to read it you can go here.
While there were many goodies from the letter, one that stuck out to us was the comments about the dividends and dividend growth from his "Big Four" investments - American Express (NYSE: AXP) (Buffett owns 13%), Coca-Cola (NYSE: KO) (8.8%), IBM (NYSE: IBM) (5.5%), Wells Fargo (NYSE: WFC) (7.6%).
Buffett said he views his holdings in these companies as "partnership interests in wonderful businesses, not as marketable securities to be bought or sold based on their near-term prospect." Here is why....
The Oracle said had he owned the Big Four throughout last year, Berkshire's (NYSE: BRK-B) (NYSE: BRK-A) share of the dividends would have been $862 million. That's just the dividends - not the earnings! Their share of the earnings of the four would have been $3.3 billion. The difference of ~$2.4 that goes unreported on Berkshire's books "creates at least that amount of value for Berkshire as it fuels earnings gains in future years," he said.
Buffett expects the dividends of these four beasts to increase every year "for a long time to come."
10 years from now Buffett said his current holdings of the four companies "might well account for earnings of $7 billion, of which $2 billion in dividends would come to us."
Here are the current annual dividends and yields for the "Big Four":
American Express - Annualized Dividend: $0.72 | Dividend Yield: 1.3%
Coca-Cola Co. - Annualized Dividend: $2.04 | Dividend Yield: 2.9%
IBM - Annualized Dividend: $3.00 | Dividend Yield: 1.6%
Wells Fargo - Annualized Dividend: $0.48 | Dividend Yield: 1.6%
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While there were many goodies from the letter, one that stuck out to us was the comments about the dividends and dividend growth from his "Big Four" investments - American Express (NYSE: AXP) (Buffett owns 13%), Coca-Cola (NYSE: KO) (8.8%), IBM (NYSE: IBM) (5.5%), Wells Fargo (NYSE: WFC) (7.6%).
Buffett said he views his holdings in these companies as "partnership interests in wonderful businesses, not as marketable securities to be bought or sold based on their near-term prospect." Here is why....
The Oracle said had he owned the Big Four throughout last year, Berkshire's (NYSE: BRK-B) (NYSE: BRK-A) share of the dividends would have been $862 million. That's just the dividends - not the earnings! Their share of the earnings of the four would have been $3.3 billion. The difference of ~$2.4 that goes unreported on Berkshire's books "creates at least that amount of value for Berkshire as it fuels earnings gains in future years," he said.
Buffett expects the dividends of these four beasts to increase every year "for a long time to come."
10 years from now Buffett said his current holdings of the four companies "might well account for earnings of $7 billion, of which $2 billion in dividends would come to us."
Here are the current annual dividends and yields for the "Big Four":
American Express - Annualized Dividend: $0.72 | Dividend Yield: 1.3%
Coca-Cola Co. - Annualized Dividend: $2.04 | Dividend Yield: 2.9%
IBM - Annualized Dividend: $3.00 | Dividend Yield: 1.6%
Wells Fargo - Annualized Dividend: $0.48 | Dividend Yield: 1.6%
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