Have you ever wondered what would've happened if you'd invested in a company like Coca-Cola years ago? The answer might surprise you. Because what started as a modest $1,000 investment in 1995 would today have turned into more than $9,000. The most interesting part is that much of those gains don't come from the stock's rise, but from dividends.
The power of long-term investing
Investing isn't about getting rich overnight. It's more of a marathon. In Coca-Cola's case, there are two main ways to generate income:
- Stock appreciation: when the price rises over time.
- Dividends: payments the company periodically gives to its shareholders.
In our example, of those $9,030 accumulated over three decades, about $4,270 come from the increase in the stock price. But what's surprising is that dividends add up to even more: around $4,760. That is, almost half of the total gains.
Coca-Cola, the dividend queen
Coca-Cola isn't just any company. It has spent more than 60 years consecutively increasing its dividends. This makes it a "Dividend King," a title for companies with an impeccable track record in payments.
Currently, its dividend yield stands near 2.9%. For comparison, the average for the S&P 500 index is just 1.2%. That's why investors seeking stable income often see Coca-Cola as a safe option.
Better than the market?
However, if what you're looking for is rapid growth, Coca-Cola doesn't win the race. One fact makes it clear: if that same $1,000 had been invested in the S&P 500 index in 1995, today we'd be talking about around $20,000. More than double.
This doesn't mean Coca-Cola is a bad investment. On the contrary, what it shows is that it's a mature, reliable stock focused on generating steady income, not explosive growth.
Warren Buffett's example
If we're talking about Coca-Cola, it's impossible not to mention Warren Buffett. The legendary investor bought millions in company shares in the late 1980s and hasn't sold a single one since then.
What's interesting is that Buffett doesn't even reinvest the dividends he receives. He prefers to collect them and allocate them to other businesses. That says a lot: what he values most about Coca-Cola is its stability as a source of passive income.
Is it worth investing today?
Everything depends on your goals:
- If you want stable and reliable income, Coca-Cola remains a solid bet.
- If you're seeking accelerated capital growth, there are probably more attractive options in sectors like technology.
The big lesson is clear: investing for the long term, even with small amounts, can make a difference. Coca-Cola doesn't turn people into millionaires overnight, but it does prove that patience and dividends can be a safe path toward financial freedom.