Warren Buffett is one of the most famous investors of all time. His success — both personally and through his company, Berkshire Hathaway — speaks for itself. Much of Buffett’s success owes to just how clear and simple his investing philosophy is. One thing he constantly preaches is the importance of keeping a long-term mindset when investing. He’s the poster child for the buy-and-hold strategy.
For investors looking to mimic Buffett’s long-term investing approach, here are three Buffett stocks you can buy and feel comfortable holding on to forever.
1. Coca-Cola
Coca-Cola (NYSE: KO) is Berkshire Hathaway’s fourth-largest holding, making up 6.5% of its stock portfolio. Berkshire Hathaway first started buying Coca-Cola in 1988 and has since accumulated 400 million shares of the beverage giant.
Thanks to its flagship soda, Coca-Cola may be the most recognizable brand worldwide. One of its greatest accomplishments is how much distribution it’s managed to achieve globally (and profitably). It has more than a 43% market share for non-alcoholic beverage sales globally.
Coca-Cola has always been a cash cow, but it’s seen a significant improvement in its financials in the past three years. Revenue and net income are up over 38% and 46%, respectively, and it’s managed to increase its dividend while lowering its payout ratio consistently.
KO Revenue (Quarterly) data by YCharts
Coca-Cola’s dividend is a selling point for investors. It’s as reliable as it comes, having been increased for 61 consecutive years. Coca-Cola’s trailing-12-month dividend yield of around 3.2% is more than double the S&P 500 average.
One thing you don’t have to question about Coca-Cola is its commitment to innovation and adjusting to consumer preferences. It has continuously shown a willingness to expand its product line and adapt to market trends. That’s a recipe for sustained success.
2. Apple
You don’t get the esteemed title of the world’s most valuable public company by accident. It takes decades of innovation, vision, and execution — and that’s exactly what Apple (NASDAQ: AAPL) has done.
Berkshire Hathaway owns over 50 stocks, but none carry as much weight as Apple. It accounts for over 46% of the portfolio. While that’s not a strategy recommended for the typical investor, it’s worked well for Berkshire Hathaway, especially considering Apple stock is up around 600% since Berkshire’s first investment in Q1 2016.
People may point to slowing and inconsistent iPhone sales as a cause for caution, but Apple has been taking steps to be less reliant on it. The iPhone still accounts for 48% of Apple’s revenue, but its services segment has steadily become a more significant revenue stream. That helps with diversification and Apple’s margins because services typically have much higher margins than hardware products.
Apple’s entrance into different services, like financial (Apple Card) and health (Health app), should be encouraging because those are industries with large total addressable markets due for disruption. And who better to do it than Apple, which has more resources than arguably any other company?
3. Procter & Gamble
Procter & Gamble (NYSE: PG) (P&G) may not be the most recognizable name, but its collections of brands are sure to be. P&G is a conglomerate that owns household products like Tide, Old Spice, Gain, Crest, Pampers, and plenty more. It’s one of Berkshire Hathaway’s smaller holdings, representing just over $48.5 million worth of shares.
P&G is in a great position because it sells products that consumers buy regardless of the economy. When money is tight, it’s relatively easy to choose generic-brand soda over name-brand soda or delay getting the new iPhone model. With P&G’s countless brands covering baby care, feminine care, home care, and personal healthcare, it’s much harder to eliminate these products from the budget.
Investors shouldn’t buy P&G expecting double-digit percentage growth each year (organic sales increased 7% from its fiscal 2022 to 2023), but they can be sure the dividend won’t be going anywhere. P&G has 67 straight years of dividend increases and 133 years of dividend payments in general. There’s a reason it’s a blue-chip stock.
P&G isn’t quite “cheap” by many metrics, but if you’re buying and holding on to the company for the long term, you shouldn’t give much thought to it.
Sometimes, it’s as simple as asking yourself, “Is this company selling something that people will always buy?” If that answer is yes and the company has a track record of growth and stability — like P&G does — then rarely can you go wrong.
10 stocks we like better than Berkshire Hathaway
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Berkshire Hathaway wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 18, 2023
Stefon Walters has positions in Apple. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
