Buffett Collects A 50% Dividend Yield… From The Coca-Cola Company (KO)?!

The $134 billion company practically dominates the routing and switching market, providing what is essentially the “backbone” of the Internet. And considering that global Internet and data traffic is projected to continue growing at a near-exponential rate in the coming years, the company stands to benefit from steady cash flows to keep adding to its “dividend vault.”

But rather than just letting that money just sit there, Cisco Systems, Inc. (NASDAQ:CSCO) has been rapidly increasing its dividend since it began paying one two years ago.

Since March 2011, Cisco has raised its quarterly dividend 183% — from six cents per share to 17 cents per share. For investors who bought it then, that means a $1,000 annual dividend check has turned into $2,830 in a little more than two years.

If you bought shares today and the company kept growing its dividend at that pace, you would collect a 73% yield just five years from now.

To be realistic, it’s unlikely that Cisco Systems, Inc. (NASDAQ:CSCO) can keep raising its dividend by 90% every year, even with as much cash as it has saved. But even if the company increased its dividend by less than a third of that pace (with a more realistic 25% dividend growth rate) every year, look at what kind of yields you could collect after just holding onto your shares for a few years…

By 2018, you would collect a hefty 8.5% yield if you bought shares today. And in just 10 years from now, you would earn a 26% yield. In other words, by the 10th year, a $10,000 investment made today would throw off $2,600 worth of dividends in that year alone.

Now that’s tall order for most companies. But it’s not hard to imagine Cisco, with its $47 billion “dividend vault” and its stable, expanding business, growing its dividend by about 25% a year for the next few years.

Action to Take –> Whatever the exact dividend yield ends up being, Cisco and the 12 other “Dividend Vault” stocks could grow their dividends for decades. And that could easily mean yields of 10%, 20% or more for investors willing to simply hold on and collect a growing stream of income from these stocks.

Warren Buffett’s Top 5 Stocks Buffett’s firm, Berkshire Hathaway, holds dozens of stocks. But these five make up 75% of its portfolio… worth $65 billion. Click here to get Buffett’s top 5 stocks plus his 16 latest buys, FREE.

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