Warren Buffett can teach us a lot about investing. And he's got 60 years of credentials in leading Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) to back it up.
Buffett favors a buy-and-hold investing style in which he looks for companies with strong management, a great competitive moat, impressive earnings, solid profits, and, ideally, a good dividend. From this formula, Buffett helped turn Berkshire Hathaway into a $1 trillion conglomerate.
Image source: The Motley Fool.
He also beats the market. Since he took the reins at Berkshire Hathaway, the company's investment portfolio has generated a compound annual gain of 19.9% versus the S&P 500's annual gain of 10.4% from 1965 through 2024. That means Berkshire Hathaway enjoyed gains of 5,502,284% versus the index's return of 39,054%.
And here's one more lesson that Buffett teaches -- the importance of diversification. Berkshire Hathaway's portfolio includes dozens of companies, some of them being the best-known in the world. Buffett knows that you shouldn't put all your eggs in one or two stocks. You need to spread it around.
So, let's create an ideal Buffett-inspired portfolio comprised of some of Berkshire Hathaway's holdings. Using fractional shares, we'll divide a hypothetical portfolio of $5,000 equally into four stocks, which represent a variety of industries. Here's how it shakes down, investing $1,250 into each.
Amazon
Buffett doesn't invest in a lot of tech stocks, but he made an exception for Amazon (AMZN +1.73%). Amazon has a dominant position as an e-commerce company, bringing in $136.8 billion in revenue in the second quarter alone. But Amazon Web Services (AWS) is the profit driver for Amazon stock, growing 17% from a year ago and accounting for more than half of Amazon's total profit.
NASDAQ: AMZN
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Amazon stock is little changed on the year, but the company's growth story is clear, particularly as more companies look to migrate to the cloud -- where Amazon has a leading position with 30% of the global cloud computing market. You can buy 5.6 shares of Amazon stock with your $1,250 investment.
American Express
Berkshire Hathaway also has stock in Mastercard and Visa, but my pick here is American Express (AXP +1.41%) for a couple of reasons. First, the company has an extra income stream -- it not only issues cards like Visa and Mastercard, but it also has its own payment network from which it makes loans and earns income from the interest. American Express reported $5.4 billion in loan income in the third quarter of fiscal 2025, up 10% from a year ago.
NYSE: AXP
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American Express also offers a small dividend, with a yield of 0.9%, which is always a welcome addition to a portfolio. With the stock currently around $350, you'll get roughly 3.5 shares with your $1,250 investment.
Chevron
Chevron (CVX 0.59%) is a consolidated energy company that just got bigger. It recently completed its $55 billion acquisition of Hess, beating out ExxonMobil in a legal battle that gives Chevron access to the Guyana Stabroek Block's 11 billion barrels of oil.
The company's earnings have suffered this year as oil prices have fallen, but Chevron still prints money. Revenue of $44.8 billion in the second quarter was down from $51.2 billion a year ago. And earnings slipped from $4.4 billion and $2.43 per share to $2.49 billion and $1.45 per share.
NYSE: CVX
Key Data Points
But remember, you're buying Chevron here as a long-term play, and I don't mind getting in while it's slightly underperforming the market. The 4.4% dividend yield is a nice kicker as well. You can get just over eight shares of Chevron stock.
Coca-Cola
Remember, Buffett likes companies that have a great competitive moat. That's why when you're looking for consumer staples companies, Coca-Cola (KO +0.02%) stands out. Coca-Cola has a 48% market share in the U.S. soft drink market, and it also sells water, sports drinks, juices, coffee, and alcohol-infused drinks.
The company just posted third-quarter earnings, in which net revenue jumped by 5% from a year ago to $12.5 billion and earnings per share rose 30% to $0.86. Coca-Cola also provides a dividend yield of 3% -- making this a delicious addition to your portfolio.
Priced at just $71, you can add more than 17 shares of Coca-Cola stock with your $1,250 allotment.
The power of compounding
There are a lot of ways you can make a Buffett-flavored portfolio for the long term. And while this is just a suggestion, the most important thing you can do is to consistently add to your holdings and reinvest your dividend returns to accelerate your growth.
Over time, and by using the power of compounding returns, you will be able to watch your portfolio grow -- just like Warren Buffett.
