Warren Buffett, the outgoing CEO of Berkshire Hathaway, is arguably the greatest investor of all time, so it's no surprise that investors all over the world try to replicate his investing style.
Inside Berkshire's massive, roughly $315 billion equities portfolio are 41 stocks in a range of different sectors. Most of them have their pros and cons. But if one truly wants to follow Buffett's style, they can start by looking at the stocks the Oracle of Omaha has owned the longest. Here are two Buffett stocks to buy and hold for the long haul.
Image source: Motley Fool.
1. American Express: Two wonderful businesses
While Buffett has a long history with the payments and credit card giant American Express (AXP 1.40%) dating back to the 1960s, the origins behind Berkshire's current investment in the company began in 1991. Berkshire invested $300 million in the company in exchange for preferred shares yielding 8.5%. Today, the position is valued at around $55.4 billion and consumes over 17% of Berkshire's portfolio.
Amex has two wonderful businesses. One is the credit card lending business, which extends revolving debt to consumers. But this isn't any old credit card business. Many consumers view the Amex brand essentially as an elite form of status, whether it's a symbol of wealth or someone who loves spending money on experiences. Either way, this brand has attracted high-net-worth individuals who are more resilient through the economic cycle. Many of Amex's customers spend as much as $695 annually on Amazon's platinum card, which generates strong, recurring annual revenue.
NYSE: AXP
Key Data Points
Amex's second business is its closed-loop payments system, which helps merchants process credit card transactions and generates strong fee income. Very few companies can successfully be a card issuer and operate a payment network because setting up a strong payment network requires immense scale that is very difficult to replicate.
The combination of these two incredible businesses has led to a premium valuation for Amex's stock, which is up close to 280% over the past five years. Like Buffett, investors can hold Amex stock for decades to come.
2. Coca-Cola: An iconic brand and strong dividend
Berkshire first purchased the iconic consumer staples brand Coca-Cola (KO 0.86%) in 1988 and hasn't looked back since. The stock consumes close to 9% of Berkshire's portfolio. Coca-Cola has developed an enviable brand that consumers won't scrap from their budgets, even when times get tough. That's how a good brand can translate into strong financial performance.
Over the past decade-plus, Coca-Cola has shifted its business model back to a capital-light franchising strategy, in which the company sells syrup concentrate behind its drinks to independent bottlers, who then produce and sell the drinks in their respective territories. Coca-Cola focuses heavily on branding, marketing, and building out its portfolio of beverages, which has expanded significantly. You may not know it, but Coca-Cola owns many brands outside carbonated sodas, including BodyArmor, Costa Coffee, Dasani, and even alcohol brands like Topo Chico.
NYSE: KO
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Investors view the stock as defensive. So far, Coca-Cola has been able to navigate the landscape with tariffs this year pretty well and is still projecting about 5% to 6% organic revenue growth in 2025, even if the company is no longer considered the high-growth juggernaut it once was.
Coca-Cola has also become a staple in the portfolios of income investors. The company is part of an elite group called Dividend Kings, which have paid and raised their annual dividend for at least 50 consecutive years. In fact, Coca-Cola raised its dividend earlier this year for the 63rd straight year. The yield is also attractive at about 3%.
