Warren Buffett and his company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) need no introduction. Between 1965 and 2023, Berkshire’s stock generated a complete gain of 4,384,748%, or a compound annual gain of 19.8%. Over the identical period, the broader benchmark S&P 500 including dividends generated a complete gain of 31,223%, or a compound annual growth rate (CAGR) of 10.2%. This dominance is considered one of many reasons investors revere Buffett and Berkshire.
While you must never invest without doing due diligence, you’ll be able to follow Berkshire’s portfolio for investment ideas, or to envision your thesis if Berkshire is buying or selling a stock that you just might need done the alternative with. Listed here are the very best Buffett stocks to purchase with $1,200.
Berkshire first bought Coca-Cola (NYSE: KO) within the Eighties, and it has been a giant winner over the various a long time Berkshire has owned the stock. Coca-Cola is Berkshire’s fourth-largest position and makes up 8.4% of the conglomerate’s roughly $297 billion equities portfolio.
Why does Buffett love Coca-Cola a lot? The dividend. In Berkshire’s 2022 letter to shareholders, Buffett wrote that the dividend Berkshire received from the corporate in 1994 was $75 million. By 2022, that dividend had grown 838% to $704 million. Today, Coca-Cola’s dividend yield is roughly 3.1%. The corporate has increased its dividend for an astounding 62 consecutive years, putting it in an exclusive club often known as the Dividend Kings. This is simple, reliable money for Berkshire, and the checks money every yr.
Coca-Cola’s stock has not performed well lately. While the broader market soared over 53% in 2023 and 2024, Coca-Cola’s stock fell 2%. Consumer staples are seen as defensive during high-inflation environments. People will typically still buy essentials in an expensive economy, and firms can typically pass on a rise of their prices to customers.
Nonetheless, once the Fed stopped raising rates and inflation eased, consumer staples became less attractive. Moreover, they began to have less pricing power as consumers began to hit their breaking points.
While the environment could remain difficult for consumer staples, many analysts view Coca-Cola as an outlier resulting from its strong execution within the U.S. and renewed concentrate on global franchising. While waiting for these efforts to translate into appreciation for the stock, investors can collect a gentle and growing stream of passive income every three months.
Since launching a latest stake within the U.S. oil producer Occidental Petroleum (NYSE: OXY), Berkshire has bought the stock like there isn’t a tomorrow. Occidental is the sixth-largest position in Berkshire’s portfolio, and Berkshire now owns over 28% of outstanding shares.