Warren Buffett and his business Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) needs no introduction. Between 1965 and 2023, Berkshire shares generated a total gain of 4,384,748%, or a compound annual gain of 19.8%. During the same period, the broader reference S&P 500 including dividends generated a total gain of 31,223%, or a compound annual growth rate (CAGR) of 10.2%. This dominance is one of the many reasons why investors revere Buffett and Berkshire.
While you should never invest without doing due diligence, you can follow Berkshire’s portfolio for investment ideas, or to verify your thesis if Berkshire is buying or selling a stock with which you could have done the opposite. Here are the best Buffett stocks to buy with $1,200.
Berkshire first bought Coca-Cola (NYSE:KO) in the 1980s, and it has been a big winner over the many decades that Berkshire has owned the stock. Coca-Cola is Berkshire’s fourth-largest holding and represents 8.4% of the conglomerate’s approximately $297 billion portfolio.
Why does Buffett love Coca-Cola so much? THE dividend. In Berkshire’s 2022 letter to shareholders, Buffett wrote that the dividend Berkshire received from the company in 1994 was $75 million. By 2022, this dividend had increased by 838% to $704 million. Today, Coca-Cola’s dividend yield is around 3.1%. The company has increased its dividend for 62 consecutive years, putting it in an exclusive club known as Dividend Kings. It’s easy, reliable money for Berkshire, and cash checks every year.
Coca-Cola stock has not performed well in recent years. While the broader market soared more than 53% in 2023 and 2024, Coca-Cola shares fell 2%. Consumer staples are considered defensive in high inflation environments. People will generally purchase essential items in an expensive economy, and businesses can usually pass on an increase in their prices to customers.
However, once the Fed stopped raising rates and inflation eased, consumer staples became less attractive. Additionally, they began to have less pricing power as consumers began to hit their breaking points.
While the environment may remain challenging for consumer staples, many analysts view Coca-Cola as an outlier due to its strong execution in the United States and focus on global franchising. By waiting for these efforts to translate into stock appreciation, investors can collect a steady and growing stream of passive income every three months.
Since launching a new stake in the US oil producer Western oil (NYSE:Oxy)Berkshire bought the stock like there was no tomorrow. Occidental is the sixth position in Berkshire’s portfolio, and Berkshire now owns more than 28% of the shares outstanding.
