Warren Buffett certainly knows how to pick 'em. While the investing community reels from the impact of President Trump's tariff program, many Buffett stocks are beating the market. Beating the market in this context could still mean losses that aren't quite as bad. However, some Buffett stocks remain higher this year, and these are the kinds of established, safe stocks he loves and counts on. Consider how Coca-Cola (KO +0.01%) stock and Kroger stock (KR +3.72%) are faring as compared with the S&P 500 this year.
Let's see why investors are finding these stocks compelling right now.
1. Coca-Cola: The Dividend King
Coca-Cola reached a record high last week just after the tariff announcements when the markets plunged. It has since dropped a bit, too, but there's no mistaking its incredible strength in the face of massive market pressure.
Part of what has been sinking the markets is the "flight to safety," which means that investors pull their money out of riskier stocks and invest instead in rock-solid, safe stocks. Investors know that Coca-Cola is a company that won't go under even in the event of a recession and that consumers will keep buying its popular beverages.
NYSE: KO
Key Data Points
That doesn't mean it will never struggle or report a decline; it did both early in the pandemic when revenue plummeted. But investors know that it won't go under, that it will keep serving its non-alcoholic, ready-to-drink beverages, and that people will keep buying. It also doesn't mean that Coke will be insulated from the impact of tariffs, but investors know that it will be able to manage through them.
Investors also know that Coca-Cola will pay and raise its dividend no matter what, which it continued to do under pandemic duress when its payout ratio exceeded 100%. Being able to rely on passive income despite economic pressure is an extremely attractive feature in a stock. Coca-Cola is a Dividend King, and it just raised its dividend for the 63rd year consecutively. There are only a handful or so of companies that can beat that reliability. Its yield is also usually high, although it's lower now because the stock price has jumped, coming in at 2.9% right now. That's still well above the S&P 500 average of 1.3%.
Buffett has praised Coca-Cola, Berkshire Hathaway's longest-held stock, time and time again, and now is one time where anyone can see why it's a great safe stock to have in a portfolio.
2. Kroger: The supermarket giant
Like Coca-Cola, Kroger is a safer, dividend-paying stock. It's the largest premium supermarket chain in the U.S., with more than 2,700 stores under several different brand names and $147 billion in trailing-12-month revenue. Shoppers will always need groceries, and many of them prefer the premium kind instead of the discount kind.
NYSE: KR
Key Data Points
Because Kroger reports earnings on a different schedule than many public companies, it provided its 2024 fourth-quarter report (ended Feb. 1) early in March, when tariffs were already on the table. Management feels that the impact is likely to be less than that of other companies because it operates domestically in the food space. Although it does deal with international suppliers, it feels like it has an advantage over other operators and that there will only be a small impact on its business. Because it's such a big business, it has leverage, and it's already looking into diversifying its supplier base to account for the tariff impact. This update may have had a positive effect on Kroger's stock as the tariff program rolled out, and investors already know that the impact is likely to be minimal.
Kroger stock is a fairly recent addition to the Berkshire Hathaway portfolio, and although it was somewhat distressed when Buffett and his team bought shares, it has since improved, and its stock has more than doubled over the past five years.
Kroger's dividend yield is more modest than Coke's, but it's still well above the S&P 500 average at 1.9%. Kroger is another safe stock that investors can count on to provide essentials for its customers and pay reliable passive income for years.
