Legendary investor Warren Buffett recently made the surprise announcement that he will step down as CEO of Berkshire Hathaway at the end of this year. Longtime protégé and current Berkshire vice chairman, Greg Abel, has been named his successor and will look to continue Buffett's legacy of success and the financial conglomerate's history of market-beating returns.
If there's a retirement party being planned, it wouldn't be a surprise if Coca-Cola (KO 1.03%) products and Domino's Pizza (DPZ 0.07%) are served. The two consumer goods giants are staples of the Berkshire portfolio, embodying Buffett's investing philosophy of seeking out companies with strong fundamentals, durable competitive advantages, and consistent cash flows. That profile makes them attractive in a turbulent economic environment.
Let's discuss why high-quality pizza and cola dividends might be the key to a recession-resilient portfolio.
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The resilience of Coca-Cola and Domino's
It's been a wild start to 2025 on Wall Street amid concerns regarding the strength of the U.S. economy and the possible impact of changes to trade policy. Soft economic data, including consumer confidence near a five-year low, underscore uncertainties. While a recession is still far from certain, it's a scenario investors should be prepared for.
No company is truly "recession-proof." Stock-price volatility and sell-offs are just a reality of investing, something Warren Buffett knows well through his career, spanning more than seven decades. His method for success has always been centered on maintaining a long-term perspective.
Globally diversified Coca-Cola and Domino's Pizza offer stability, including from reliable dividends, making them resilient anchors in any portfolio across economic cycles. The idea is straightforward. In a recession, marked by rising unemployment and a decline in economic activity, consumers tend to reduce spending on non-essential items like luxury goods or travel, while demand for food and beverages remains relatively shielded due to their essential role in daily life.
Coca-Cola is a Dividend King
The Coca-Cola Company is a longtime favorite of Buffett, and for good reason. The company has been highly successful in moving beyond its traditional focus on soft drinks. Today, with consumers increasingly choosing healthier beverage options, it markets more than 200 brands across categories, including sports drinks, flavored water, juices, and dairy products.
According to a recent Securities and Exchange Commission (SEC) filing, Coca-Cola is one of Berkshire Hathaway's largest holdings, valued at approximately $28.7 billion. The stock has outperformed, rising 16% year to date following a series of better-than-expected quarterly earnings.
NYSE: KO
Key Data Points
For the full-year 2025, management is guiding for organic revenue growth between 5% and 6%, along with a solid 7% to 9% increase in adjusted currency-neutral earnings per share (EPS). Cost-control initiatives coupled with strong growth in emerging markets have been an earnings driver and are expected to continue.
That's great news for shareholders thinking about Coca-Cola's $0.51 per-share quarterly dividend, yielding 2.8%. Recognized as a Dividend King with 62 consecutive years of payout increases, Coca-Cola is well-positioned to keep its streak going and generate positive returns.
Domino's dividend growth
Domino's Pizza is a more recent Buffett stock, as Berkshire Hathaway first acquired a position in shares of the restaurant chain last year, now representing a 7% stake in the company. Yet, the investment proved to be timely as the stock is up 14% thus far in 2025.
The allure of this pizza restaurant chain is precisely in its diversification, with more than 21,000 stores in over 90 countries. In the first quarter (for the period ended March 23), momentum from its international locations helped balance softer trends in the U.S., resulting in a 20.9% increase in EPS and a 2.5% revenue growth from last year.
NASDAQ: DPZ
Key Data Points
In terms of its recession resiliency, cash-strapped consumers are more likely to forgo a fancy dinner for the convenience and affordability of a Domino's carry-out or delivery deal than abandon the company completely. Management is projecting confidence into the outlook by announcing a 15% dividend rate hike to $1.74 per share earlier this year, which now yields 1.5%.
As Warren Buffett prepares to step down, his investment philosophy endures through companies like Coca-Cola and Domino's Pizza, which provide resilience and growth opportunities in any economic environment. Their iconic brands, worldwide presence, and dependable dividend income make them ideal cornerstones for diversified portfolios.
