The Berkshire Hathaway portfolio is a great place to look for investing inspiration. However, investors shouldn't necessarily mimic Warren Buffett's investing moves.
For one thing, Berkshire Hathaway is a holding company and has specific corporate goals that aren't the same as an individual investor's. For that reason and others, it sells stocks when necessary. You might buy a Buffett stock today and find out that Buffett and his team closed out their position when Berkshire Hathaway reports its earnings.
But some of these top stocks have been in the Berkshire Hathaway portfolio for years or even decades and could add tremendous value to just about any individual investor's holdings. Consider Amazon (AMZN 3.43%), Coca-Cola (KO), and Visa (V -0.23%) stock. If you have $1,000 to buy stocks after paying off debt and saving for an emergency fund, each of these could add something different and important to a well-rounded portfolio.
1. Amazon: The growth stock
Buffett only bought Amazon stock in 2019, after the company had become an e-commerce, logistics, and cloud computing powerhouse. He famously said, "I was too dumb to realize what was going to happen," but that didn't stop him from buying it later.
This is a great lesson for investors -- to look ahead and not behind. Amazon stock has gained around 70% since Berkshire Hathaway started its position.
There are plenty of reasons Amazon could continue to be an amazing stock to hold for decades. After downward pressure last year, sales growth is back in the double digits, up 13% year over year in the 2023 third quarter.
The company also made important changes to its distribution system to get more items to shoppers quicker and more cheaply. Between investments in artificial intelligence (AI) and its new and improved delivery network, it should keep up faster, cost-efficient shipping. E-commerce is accelerating again, and Amazon is well-positioned to pad its lead.
It also has the top position in cloud computing, with 32% of the market, according to Statista. Amazon Web Services (AWS) launched several new generative AI services last year that now make it the player to beat. The segment usually pulls more than its weight in company income, and as clients start to increase their budgets again, AWS sales should grow faster.
Amazon has plenty of other businesses that are just getting started, too. Advertising continues to be its fastest-growing segment, and the company is competitive in streaming. It's doubling down on developing a massive healthcare business, and there are other businesses in the works.
The company's stock has gained almost 60% over the past year, and you can expect more in 2024.
2. Coca-Cola: The dividend stock
Coca-Cola is the longest-held stock in the Berkshire Hathaway portfolio, and Buffett has said that he would never sell it. It's the largest beverage company in the world, has an incredible brand, and pricing power with its loyal fans.
It's been reporting continued strength despite a host of challenges over the past few years, with increasing profits and steady margins. Management sees a large market opportunity, with industry growth from $650 billion in 2017 to $1.3 trillion. It expects all of its categories to increase at compound annual growth rates in the mid-single digits and sees plenty of market share for the taking.
Coca-Cola is considered a safe stock and often moves in reverse to the market -- at least that's what's been happening over the past few years. It gained 7% in 2022 when the market dropped 19% and dropped 7% in 2023, while the market moved up 24%. It hasn't been a market-beating stock over the past few decades but is reliable for growth and provides protection during challenging times.
Specifically, Buffett and other investors love Coca-Cola stock for its dividend. The company is a Dividend King and is getting ready to raise its dividend for the 62nd consecutive year. It's raised and paid the dividend through thick and thin, making it incredibly reliable under any circumstances. The dividend yield is 3.1% at the current price, about double the S&P 500 average, and it's a top dividend stock to add to a diversified portfolio.
3. Visa: The value stock
To round this out, let's look at an amazing forever stock to add to any portfolio. Visa is the largest payment-processing network in the world and runs a growing, relevant, and highly profitable business. In other words, it's a fantastic company with many growth avenues and opportunities and a no-brainer stock to own.
In general, Visa's performance mirrors the economy. As the top company of its kind, with $15 trillion of processed-payment volume over the trailing 12 months, it stands to gain from growth in spending. It takes a small fee every time a shopper swipes a card, which also leads to higher income without increased costs.
The company is doing just fine now, despite the inflationary environment. Sales increased 11% in fiscal 2023 (ended Sept. 30), and earnings per share rose 18% over last year.
Visa has been at the forefront of developing new technology in digital payments and is seeing strong results from its alternative payments and other bets. It continues to create and expand partnerships with global financial institutions and merchants and is well-positioned to spring even higher when inflation moderates and interest rates are cut.
Visa stock has beaten the market for years, and that should continue for the foreseeable future.
