Warren Buffett has become arguably the greatest investor of our time by holding onto great companies that can withstand volatile markets. Now that he's stepped down from leading Berkshire Hathaway, he'll become even more of a legend. But the great company he built up persists in the capable hands of Greg Abel, and in Abel's first shareholders' letter, he made it clear that he's not looking to change up the business.
That means the Buffett favorites aren't likely to disappear from the equity portfolio, at least not overnight. There's wisdom in Buffett's picks, and you can often see that most clearly when there's market volatility.
Consider Coca-Cola (KO 0.01%) and Kroger (KR 3.04%), which both do well under challenging circumstances.
Image source: The Motley Fool.
1. Coca-Cola
Coca-Cola is that classic example of a stock that can endure. Buffett has mentioned it many times over the past several decades as a stock that will always play a role in the U.S. economy and won't be outdated with new technology. It has survived for more than a century and a half by providing beverages customers love and keeping up with changing tastes and trends.
NYSE: KO
Key Data Points
It's also an excellent example of a stock that protects your portfolio when times are rough. Investors often pile into safe stocks when the market is down, and Coca-Cola has delivered some of its best recent performance when the S&P 500 has fallen. Consider that throughout the recent geopolitical unrest and resulting oil price changes, the S&P 500 is roughly flat year to date, while Coca-Cola stock is up 12%.
Part of the confidence in Coca-Cola stock comes from its status as a Dividend King. Coca-Cola has raised its dividend for the past 64 years annually, rain or shine, and investors can count on that to continue for the foreseeable future, making Coca-Cola a top forever stock.
2. Kroger
Kroger is the largest premium grocer in the U.S., with nearly 2,700 stores under several banners. Since the company operates in grocery, which is the largest expense for Americans after housing and healthcare, it has a massive and growing market opportunity. And since Kroger operates premium supermarkets, it attracts a more affluent clientele that's more resilient under difficult circumstances.
NYSE: KR
Key Data Points
Unlike Coca-Cola, which is the longest-held position in the Berkshire Hathaway equity portfolio, Kroger stock is a fairly recent Berkshire addition. Buffett scooped it up in 2019 after the stock had dropped and was trading at a dirt cheap price. While Kroger is not as cheap these days, it still offers value in its resilience and food platform.
Kroger also pays a dividend, and while it's not as high-yielding or with as long a track record as Coca-Cola, it's growing at a fast pace, rising nearly 1,000% over the past 20 years. Kroger stock is up 9% this year, and it offers stability and a reliable passive income stream.
