“Berkshire can lose 99.4% and still have outperformed the S&P 500 since ‘current management’ bought control in 1965”. This is what Christopher P. Bloomstran said in a recent X ( Twitter) post. Bloomstran is the President and Chief Investment Officer of Semper Augustus Investments Group.
Berkshire’s stock price has a remarkable track record of outperforming the S&P 500 over the long term. Between 1965 and the end of 2022, Warren Buffett’s Berkshire Hathaway stock price increased by nearly 37,87,464% – a gain more than 100 times bigger than the S&P 500’s 24,708%% increase during the same period. In compounded annulaized terms, the Berkshire Hathaway stock gave 19.8% returns for the period 1965-2022.
At year-end 2022, Berkshire was the largest owner of eight of these giants: American Express, Bank of America, Chevron, Coca-Cola, HP Inc., Moody’s, Occidental Petroleum and Paramount Global.
Bloomstran also shared another stat – “But how about this fun stat: Mr. Buffett PAID under $11 per share for his position in BRK. Today, the company EARNS $11 per share. Every 2.25 hours! – is what the tweet read.
Here is what Warren Buffett wrote about the importance of dividends in the letter to shareholders of Berkshire Hathaway 2022.
Cash dividend from Coke
The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.
Cash dividend from American Express
American Express is much the same story. Berkshire’s purchases of Amex were essentially completed in 1995 and, coincidentally, also cost $1.3 billion. Annual dividends received from this investment have grown from $41 million to $302 million. Those checks, too, seem highly likely to increase