Win During Recession with Dividends

One of the best mindsets to have when it comes to a recession is how can I benefit from my economic environment? Sadly what happens is most people are strongly affected by the news media and make very poor decisions with their money when the stock market dips.

Goal with this article is to look outside the box and learn how to avoid media persuasion in your financial life. This will allow you to take advantage of market corrections, recessions and heaven forbid the dreaded depression.

Mindset

Emulation of one of the worlds greatest investors is something I aim for min my life. We are going to take a deep dive into Warren Buffett and how he bought Coca-Cola (KO) after one of the nastiest days in stock market history. Buffett first bought $1 billion Coca-Cola stocks in 1988, just months after the Black Monday 1987 market crash, a time when stock prices were generally low.

To this day KO is one of Berkshire Hathaway's biggest holdings. Warren hasn't sold a single share since his initial purchase, in fact he has only added to his position. Let's dig into why he has kept the dividend stock and how much he has earned from it.

Economic Moat

First off, Buffett believed in Coca-Cola. He knew it was a product that would be around forever. He looked around and saw people buying Coke left and right. It is a cheep product, people bought it even when times were tough, he knew that Coca-Cola was going to be around for a long time. So he believed in the company's future.

Earnings

Buffett added more holdings in 1994 bringing total shares owned to 100 million shares. The stock has split two times since bringing his total holdings to 400 million shares. Warren boasts an unrealized gain from his holdings of $20 Billion dollars. He has earned $7 billion dollars in dividend payments since 1995. He bought all his shares for a total of $1.3 billion dollars.

COST

DIVIDEND PAYMENTS

TOTAL VALUE

$1.3 Billion

$7 Billion

$22 Billion

 

Emulate Strategy

I don't know about you, but I'd love to sink my teeth into an investment like that without even blinking.

If we follow the pattern Warren Buffett has shown us we can look for opportunities that are similar. In all honesty we will never be able to get the exact results he did, but we can emulate it and aim for amazing results anyway. Granted one of the biggest problems we have is that we don’t have a billion dollars cash to drop in any stock.

That shouldn’t change your behavior of jumping on an opportunity and holding it long term like he has. You can in fact get huge returns like this and the dividends will pay off. Consistency is key when it comes to emulating the great investors of our time. I personally have gone from $0 - $750k net worth in 7 years with average income because I look for opportunities like this to take advantage of the market.

Conclusion

Getting the type of returns Warren Buffett has received aren't as impossible as you may think. Buffett harnessed the power of dividends and it has massively paid off for him because of the strategy he put to work. Here is a simplified breakdown of what he did.

  1. Bought dividend stock after market crash 1987
  2. Bought more of the same dividend stock up until 1995
  3. Didn't sell
  4. Received quarterly dividend from holding the stock
  5. Still holds same stocks 35 years later

This strategy is very possible for you to achieve. Keep your eyes peeled and ready to jump on an investment you believe in and hold it forever.

Invest what you can, dollar cost averaging into the market will do absolute wonders for your portfolio. 

Now Go get some XP and read about my top 5 tips for financial success.

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