Warren Buffett has been clear about his favorite stocks in recent years. He keeps returning to the same handful of names, three of which were Berkshire Hathaway's (BRKA +0.27%)(BRKB +0.26%) largest positions under his tenure.
One of them is the equity portfolio's longest-held position, and Greg Abel is holding on to it as he leads the company into the artificial intelligence (AI) era: Coca-Cola (KO +0.67%). (For the curious, the other two large positions are Apple and American Express, and the fourth that has been mentioned at times is Moody's.)
Why Coca-Cola is foundational
Let's go back to the very first time Buffett bought Coca-Cola stock, in 1988, when he explained why he wants to own it. For outstanding businesses with outstanding management, he wrote, "our favorite holding period is forever."
Image source: The Motley Fool.
What makes the business so outstanding?
In 1996, Buffett called Coca-Cola, along with Gillette, one of the "inevitables." He said, "No sensible observer [...] questions that Coke and Gillette will dominate." He explained that as far back as 1896, when Coca-Cola was all of a decade old, it already had high public opinion and a national sales force that kept it at the top of consumers' minds.
Then there's the fantastic dividend. Coca-Cola is a Dividend King, and it has raised its dividend annually for the past 64 years.
Altogether, Berkshire purchased $1.3 billion worth of Coca-Cola stock from 1988 through 1994, and it has never sold a share. Today, the position is worth nearly $35 billion, not including the annual dividends that Berkshire receives. In 2026 alone, that's scheduled to be $848 million.
NYSE: KO
Key Data Points
Why Coca-Cola just hit an all-time high
These are the same reasons Coca-Cola is so reliable today, and likely the same reasons that the stock just hit an all-time high. While the S&P 500 is up a respectable 14% year to date, Coca-Cola stock is crushing it, up 26%. That's not too bad for a company that's over a century old.
The market is loving the company's strong performance despite inflation and a tough operating environment. It still has a robust marketing system that put it in front of customers' faces during the summer's World Cup, and its healthy relationship with its fans resulted in a 6% year-over-year increase in organic revenue in the second quarter (organic revenue strips out acquisitions, divestitures, and currency swings).
Investors know that they can count on Coca-Cola even when the market is challenging. It's a dividend payer that can reward patient retail investors, even if nobody buying today starts from Berkshire's low cost basis.
