Is Buffett's "Dividend rise magic" still working? Let's take a look at Berkshire's five cash cows.

Old Ba revealed the secret to making big money in the 2023 shareholder letter: buy those companies that raise interest rates every year, and then do nothing, letting time compound interest.

What are the most classic cases? Coca-Cola and American Express.

In the 1990s, $2.6 billion was spent to buy these two (each 1.3 billion), and now the annual dividends alone can bring in more than $1 billion. In other words, their investment from 29 years ago is now "printing money". Moreover, the most outrageous part is that these two have continued to increase interest rates from 2023 until now, with Coca-Cola rising by 19% and American Express directly more than doubling with a growth of 91%.

How are the other holdings of Berkshire? Let's take a look at the current Top 5:

Apple (22.3%): Since starting to buy in 2016, the dividends have doubled. Now it earns $291 million in dividends a year, with an investment principal of only $4 billion. Old Buffett is also making profits by buying and selling, this is the true "money making money."

Bank of America (11%): Preferred shares bought in 2011 were converted to common stock in 2017. Since then, dividends have increased nearly fourfold, now generating over $675 million annually. In 8 years, the investment principal was just over $1 billion, and the dividends alone have returned more than half.

Chevron (6.8%): Started building positions only in 2020, with dividends increasing by 32%. 1.22 million shares earned 835 million in dividends over a year, yielding 5.4%. This is relatively new, but the logic is the same as before - give it another ten or twenty years, and the impact will be even greater.

The most critical data: These five companies account for 70% of Berkshire's investment portfolio. At the current dividend rate, these companies have already been using dividends to "self-recover" their investment costs.

There is an interesting question: Old Buffett is about to retire, and the market is a bit worried about the succession of Berkshire. However, if these five companies can continue to raise interest rates at this pace, the successor actually doesn't have to do anything — just sit back and watch these dividend machines operate by themselves.

This operation tells us a simple truth: investing doesn't necessarily require frequent trading; sometimes finding the right company, time is the greatest ally.