My Warren Buffett trade today Coke...KO

C

Cabin111

Yeah, I know; Russia/Ukraine, Coke closing there, McDonald's closing in both countries.

This company adapts and always seems to come back. I asked my wife before we bought it (just 100 shares)..."With inflation, will people go back to the movie theaters and buy a Coke"?...She said "no". I then asked will people still drink Coke/Diet Coke and buy Cokes when they go to McDonald's"? She said yes...

Here is the trade...I put it in last night. I'm an Insomniac...I got up at 10:30 Pacific Time today.

I put my limit order in for $58.79...I picked it up for $58.37. I then did a covered call for the Jan 23 $62.50 at $2.35. If I bought today I will grab the dividend...You can grab it till Friday (about 3%). Just me...
 
Better hope neither gap fills, especially lower one:-
! KO.png
 
SunTrader said:
Better hope neither gap fills, especially lower one:-
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For me the question is...Do I want to own Coke at $55. in Jan 23?? With the option money, dividend money, float from the option/dividend (earning say 3%), the answer is yes.

If it's at say $55. I will still have my 100 shares and can option it again...Still get the dividends.

People will say is this a long term hold or a short term hold?? I'll answer yes...Both!!
 
The highest-yielding stock in Warren Buffett's portfolio, relative to cost basis, is beverage-giant Coca-Cola ( KO -2.21% ). Coke also happens to be Berkshire Hathaway's longest-held stock, with a continuous position since 1988.

The latest Berkshire shareholder letter shows a cost basis of $1.299 billion on the company's 400,000,000 Coke shares. This works out to a cost basis of $3.2475 per share. With Coca-Cola recently increasing its base annual dividend for a 60th consecutive year, the $1.76 paid yearly equates to a whopping 54% yield on cost. Effectively, Buffett is more than doubling his money on Coke every two years from its dividend alone.

Among the nearly four dozen securities in Berkshire Hathaway's portfolio, Coca-Cola might generate the most predictable sales growth and cash flow. That's because the company has a presence in all but two countries worldwide (North Korea and Cuba). It also controls approximately 20% of the cold beverage market share in developed countries and 10% of the cold beverage share in emerging markets. This helps Coke bring in predictable cash flow from developed markets while benefiting from faster organic growth opportunities in emerging markets.

Coca-Cola's marketing is another reason the company has performed so well over the very long run. Coke is one of the most well-known brands in the world. The company utilizes everything from its holiday tie-ins and point-of-sale advertising to digital marketing campaigns with recognizable ambassadors to connect with consumers.

Taking into account the stability of Coca-Cola's operating model and the incredible yield Berkshire Hathaway is netting annually on its stake, it's unlikely Warren Buffett will ever part with this position, as long as he's in charge.
 
Obviously KO is a great company and Buffett and alltime great investor but look at this monthly chart with boxed area of mostly sideways to down, down, down which even the greatest have on occasion. Note that is a 20 year period from 1998-2009. Again 1998 start point, or before the tech-wreck induced bear market of 2000. What good are dividends if stock possibly drops considerably?
! KO Monthly.png
 
SunTrader said:
Obviously KO is a great company and Buffett and alltime great investor but look at this monthly chart with boxed area of mostly sideways to down, down, down which even the greatest have on occasion. Note that is a 20 year period from 1998-2009. Again 1998 start point, or before the tech-wreck induced bear market of 2000. What good are dividends if stock possibly drops considerably?
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To you then (for me), it's a long term hold...Good quality stock with a good dividend. It also has future option money for me. It also sells glorified filtered water (Coke, Diet Coke, Dasani) for $1.00+ per 12-16oz!! People still buy this junk during down markets.

What are you going to give up...Diet Coke, iPhone, or your Starbucks run?? They have done studies (many), most people will not totally give up their drinks of choice during a recession.

Also, I do not pay any taxes...The dividend comes into play at that point.
 
Update: You don't get the dividend when you do a covered call. The call is discounted by the dividend amount. But hey: at least you pay taxes on the divs :D:D:D:D
 
Bet its one of the reasons Buffett doesn't do covered calls much.

Also he likes to buy low and hold looooong time.

Many books written how he does it.
 
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