Buffett's $1.3 Billion Bet on Coca-Cola Now Worth Over $34.7 Billion

Warren Buffett's son, Howard Buffett, has taken over as chairman of Berkshire Hathaway (BRKB +0.43%) after his father stepped down from the role earlier this year.

The news sparked a review of one of Buffett's most successful investments: Coca-Cola (KO -0.52%). In 1988, Buffett started buying Coca-Cola stock and has never sold a single share since then.

Today, Berkshire Hathaway holds over 400 million shares of Coca-Cola, which is approximately 9.3% of the company's outstanding shares. This investment is currently worth $34.7 billion, representing a more than 2,500% return on Buffett's initial bet of $1.3 billion.

Buffett has credited Coca-Cola's unmatched global brand and unstoppable dividend growth as key characteristics making it a 'forever' holding. He has also emphasized the importance of compounding in investing, highlighting that Coca-Cola is one of his 'compounding machines' that have delivered steady earnings and dividend growth over multiple decades.

With Coca-Cola expected to deliver 5% organic revenue growth this year and 7%-8% comparable currency-neutral earnings per share (EPS) growth, the company remains a solid compounder. The beverage giant's free cash flow more than covers its dividend, which currently yields around 2.5%. Buffett's investment in Coca-Cola is a testament to the power of buying and holding dividend growth stocks.