9 Warren Buffett Stocks to Buy and Hold Forever

Author: Matt Frankel, CFP | August 14, 2020

Warren Buffett

Source: The Motley Fool

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Set it and forget it?

There are about four dozen stocks in Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) portfolio, many of which were hand-selected by Warren Buffett himself. However, some make better "forever" stocks than others. While we don't have a crystal ball to predict the future of these companies, and even Buffett doesn't make any guarantees he'll hold particular stocks forever, here are nine stocks from Berkshire's portfolio that should produce strong performance for decades to come.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Group of people holding cups of coffee and using their cell phones.

Source: Getty Images

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1. Apple

Apple (NASDAQ: AAPL) is Berkshire's single largest stock investment by a wide margin, with a 5.8% stake in the tech giant worth about $110 billion as of this writing. In fact, Berkshire's Apple stock makes up over one-fifth of the company's entire market capitalization.

Buffett has said that he thinks of Apple as Berkshire's "third business" and has called the company the best business he knows of in the entire world. Apple has a fiercely-loyal customer base that gives it tremendous pricing power, and its rapidly-growing services business is building a stream of predictable, recurring revenue.

ALSO READ: Could This Be Apple's Big Break in This Major Market?

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Two young women pay with a credit card.

Source: Getty Images

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2. American Express

The COVID-19 pandemic hasn't spared American Express' (NYSE: AXP) business, and it's likely that we'll see a wave of credit card delinquencies before it comes to an end. However, American Express is well-positioned to make it through the tough times and should continue to thrive for decades to come.

American Express has arguably been the most innovative of the major credit card issuers in recent years, rolling out new and exciting cardmember perks that have done a great job of bringing the crucial millennial demographic into its ecosystem, which should be a long-tailed value driver for the company's shareholders.

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The inside of a Bank of America location

Source: Bank of America

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3. Bank of America

Bank of America (NYSE: BAC) has rapidly become Warren Buffett's favorite bank stock. Since adding 700 million shares to Berkshire's portfolio as a result of a financial-crisis-era investment, Buffett has recently added to the position several times. Berkshire now owns more than a billion shares of Bank of America, representing an 11.8% stake in the company.

Bank of America could arguably be called the most-improved bank in the decade since the financial crisis. The company has done a fantastic job of improving its asset quality, focusing on efficiency, and bringing profitability up to acceptable levels. And Buffett seems to think the bank is a good value at the current share price.

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Coca-Cola store in Disney Springs Orlando

Source: Coca-Cola Company

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4. Coca-Cola

Coca-Cola (NYSE: KO) is one of Berkshire's largest and longest-held stock positions. The beverage giant certainly checks a lot of the boxes Buffett looks for -- it has incredible brand power as well as cost advantages that come with its scale and massive distribution network, for example. And, Buffett loves Coca-Cola because it is a company that essentially runs itself. In fact, Buffett has said that at this point, a ham sandwich could run Coca-Cola.

And don't think because Coca-Cola has grown into a large, predictable, and even "boring" business that it can't produce returns. Over the past decade, the company has generated 127% total returns for investors, even after taking a hit during the COVID-19 pandemic.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Sale sign in a store aisle.

Source: Getty Images

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5. Costco

While "retail" has become a scary word these days, there are some forms of retail that work well in every possible environment. Costco's (NASDAQ: COST) discounted nature not only makes it a great business during both good and bad economies, but also helps insulate it from e-commerce competition as the business offers bargains that even Amazon (NASDAQ: AMZN) can't match in most cases. And as an essential business, Costco has been operating in full swing throughout the pandemic. Anyone who has been in a Costco recently can probably see why Buffett thinks it could be a forever holding.

ALSO READ: Costco Will Be a Winner as the Economy Reopens

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Woman chooses a credit card from a selection in her hand.

Source: Getty Images

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6. Mastercard

The world is steadily becoming more of a cashless place. Thanks to the rise in financial technology over the past decade or so, it is easier than ever before for businesses large and small to accept card payments and other cashless forms of paying, which is a major tailwind for Mastercard (NYSE: MA).

And if you think the cashless-payment movement has reached maturity or that Mastercard is out of room to grow, think again. Worldwide card payment volume is expected to reach $45 trillion annually by 2023 and current annualized payment volume through the four major payment networks is less than 40% of this amount. And there's an especially big opportunity in international markets, as Mastercard estimates that as much as 80% of payment transactions worldwide still take place in cash.

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The exterior of a newly-built strip mall.

Source: Getty Images

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7. STORE Capital

The only real estate investment trust (REIT) in Berkshire's portfolio, STORE Capital (NYSE: STOR) invests in single-tenant, net-leased properties. The company's tenants sign long-term lease agreements and are responsible for paying property taxes, building insurance, and most maintenance costs -- all STORE Capital has to do is put a tenant in place and enjoy years of worry-free income.

To be sure, the COVID-19 pandemic has taken its toll on STORE Capital, as a fair amount of its tenants operate businesses that have been hit hard, such as movie theaters and restaurants. However, the vast majority of the tenants should be just fine, and STORE's long-term strategy remains intact.

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8. Vanguard S&P 500 ETF or SPDR S&P 500 ETF

Warren Buffett himself has said that the best investment most people can make is a low-cost S&P 500 index fund. And Buffett recently put his money where his mouth is by adding shares of both the SPDR S&P 500 ETF (NYSEMKT: SPY) and Vanguard S&P 500 ETF (NYSEMKT: VOO) to Berkshire's portfolio.

Simply put, an investment in the S&P 500 is a bet on the long-term success of American business as a whole. As Buffett has repeatedly pointed out, betting on America has worked out very well in the past and should continue to do so over the long run.

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Warren Buffett smiling

Source: The Motley Fool

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9. Berkshire Hathaway

As a final pick, perhaps the best "forever" stock to buy on this list is Berkshire Hathaway itself. The company has evolved into a massive conglomerate that is designed to generate strong profits and create wealth no matter what the economy is doing. And your money will be spread across Berkshire's 60+ subsidiary businesses and massive stock portfolio.

Investing in Berkshire gives you a piece of GEICO, Duracell, Pampered Chef, Fruit of the Loom, Precision Castparts, BNSF Railroad, and many more. Berkshire uses the profits generated by these companies to buy even more subsidiaries and common stocks. This has been an unquestionably-powerful formula for success in the 56 years since Warren Buffett took over and should continue to be a winning strategy for decades to come.

ALSO READ: The Real Secret of Berkshire Hathaway's Success

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A fortune teller's hands poised over a crystal ball.

Source: Getty Images

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Can you really buy these stocks to hold forever?

Warren Buffett has famously said "our favorite holding period is forever." And Buffett certainly buys most of the stocks in Berkshire's portfolio with the hope that they'll be great investments for the long haul.

However, it doesn't always work out that way. So while you may buy stocks that you plan to hold forever, it's still important to do your homework to make sure that your original reasons for buying still apply.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matthew Frankel, CFP owns shares of American Express, Apple, Bank of America, Berkshire Hathaway (B shares), and STORE Capital. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), Mastercard, and STORE Capital. The Motley Fool owns shares of Vanguard S&P 500 ETF. The Motley Fool recommends Costco Wholesale and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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