Coca-Cola Stock Is Warren Buffett’s ATM

Alexander Boulden

Posted June 12, 2024

I still remember the first time I drank a Coke.

It was a hot sunny day, and I was playing a Little League baseball game.

It was the last inning, and I was feeling pretty tired.

My dad grabbed me a can of Coke from the snowball stand and said I should drink it and that it would pep me up.

I must have only been 7 or 8 years old at the time, so I didn’t really know any better.

I took a few sips and immediately felt it coursing through my body.

I took it back to the dugout and drank the rest as my team loaded the bases.

I was up to bat.

Tied game, bases loaded, and I battled in the box and got myself a full count.

The next pitch was right down the middle, and I crushed it to left field and hit the fence.

Next thing I knew, I was rounding third even though the third base coach told me to hold up.

I didn’t care. I barreled toward home plate thinking my chances were pretty good that the cutoff man would throw the ball away. It was Little League, after all.

About halfway to home plate, I saw the ball come in right to the catcher’s glove. I was screwed.

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I crashed into the catcher but was tagged out.

Didn’t matter, as we won the game anyway.

But to this day, whenever I need a quick energy boost or am feeling a little sick, there’s just something about a Coke in the can that makes you feel better.

Coke does exactly what you need it to do. It’s probably why it’s become the most popular soft drink worldwide.

The history of coke is pretty fascinating too.

Did you know that the original Coke recipe had wine in it?

Georgia pharmacist John Stith Pemberton invented Coca-Cola in the late 19th century. Pemberton wanted to invent something that he could medically patent, so he started by creating a headache and anxiety remedy. In 1886, he concocted a syrup by mixing coca leaves, kola nuts, and wine, along with other flavoring ingredients, in his backyard. The coca leaves gave it a distinctive flavor, while the kola nuts added a kick of caffeine. Add in the wine and Pemberton was creating a certified speedball. The resulting mixture was combined with carbonated water to create a fizzy beverage.

Pemberton initially intended the drink to be a medicinal tonic and called it “Pemberton’s French Wine Coca.” However, due to the prohibition laws enacted in Atlanta in 1886, which restricted the sale of alcoholic beverages, Pemberton had to modify his formula. He replaced the wine with sugar syrup, resulting in a non-alcoholic version of his concoction. See, taking alcohol out of drinks can lead to great things.

To market the new beverage, Pemberton’s bookkeeper, Frank M. Robinson, suggested the name “Coca-Cola,” emphasizing the drink’s key ingredients. The first sales of Coca-Cola took place at Jacobs’ Pharmacy in Atlanta on May 8, 1886, where it was sold as a refreshing and effervescent soda fountain drink for $0.05 a glass. It was obviously a smash hit.

However, even as the popularity of Coca-Cola grew, Pemberton faced financial difficulties, and he sold the rights to the formula shortly before his death in 1888. The brand continued to evolve under new ownership and eventually became perhaps the most iconic and widely consumed beverage ever. The Coca-Cola Company, established by Asa Griggs Candler, secured the brand’s dominance in the soft drink market and played a pivotal role in shaping the global beverage industry.

Now, modern Coca-Cola no longer uses fresh coca leaves in its formula. The original formula did contain an extract from coca leaves, which contributed to the beverage’s distinctive flavor. However, due to regulatory and legal concerns about the use of coca leaves, the Coca-Cola Company made a significant change to the recipe.

In 1904, the company began using “spent” coca leaves, meaning the cocaine content had been removed, to comply with regulations and ensure that the beverage was free of any controlled substances. The Coca-Cola Company worked with a company called Stepan Company to create a de-cocainized coca leaf extract. This process involves removing the alkaloids from the coca leaves, including the cocaine.

Since then, the Coca-Cola Company has continued to use a de-cocainized coca leaf extract to maintain the flavor profile while ensuring that the beverage is free from any controlled substances. The coca leaf extract used in Coke today is strictly regulated and closely monitored to comply with federal law. Coca-Cola is the only company in the U.S. that has access to this formula, which is why Coke tastes the best.

Coke’s history and market dominance is why so many investors keep buying the stock, including the Oracle of Omaha, Warren Buffett.

Buffett’s Secret Formula

Just as Coke uses a secret formula, Warren Buffett uses his own secret formula to print cash with Coca-Cola stock. Let me explain…

When I started investing, I traded a lot of options. I liked the quick moves and satisfaction of being correct about my predictions, but I eventually wanted to take on less risk. That’s when I discovered strategies besides just buying calls and puts. I learned I could write contracts myself by selling options, which led me to put selling.

When you sell a put — also called writing a put — you’re saying that for each contract you sell, you’ll buy 100 shares of the underlying stock if it falls to or below the strike price (otherwise called “being put”). For taking on that risk, you’re paid a cash premium.

Throughout his career, Warren Buffett collected $7.8 million in cash premiums selling puts on Coca-Cola (NASDAQ: COKE). And during the financial crisis of 2008, he made $4.9 billion selling puts on the S&P 500. Investors bought the puts as insurance because they knew if the index dropped below a certain level, Buffett would buy it. But he wanted to do this anyway because he knew the index would go up in the long term.

Just remember that if the stock you sell a put on stays flat or increases in price, you get to keep the premium, and if it hits the strike and you get put, you’re obligated to buy the stock at the strike price.

The crazy thing is you can buy Coca-Cola stock and get a 3% dividend, or nearly $0.50 a share. That’s how much the original Coke cost in the 1800s!

But if you’re morally or ethically opposed to that sort of investment, I don’t blame you. Soda is absolutely terrible for your health, after all.

But we’ve got you covered.

Here are seven high-paying dividend stocks that we like better than Coca-Cola stock.

Stay frosty,

Alexander Boulden
Editor, Wealth Daily

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After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing.

Alexander is the investment director of Insider Stakeout — a weekly investment advisory service dedicated to tracking the smartest money on the planet so that his readers can achieve life-altering, market-beating returns. He also serves at the managing editor for R.I.C.H. Report, a comprehensive service that uses the highest-quality investment research and strategies that guides its members in growing their wealth on top of preserving it.

Check out his editor’s page here.

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