Warren Buffett’s investment strategy is usually about patience, but this year, Berkshire Hathaway has been more active in selling off stocks. In the first three quarters of 2024, the company sold around $133 billion worth of stocks. A significant part of that came from its largest holding—Apple—but it also trimmed its stake in Bank of America (Source: The Motley Fool). So, what does this mean for Buffett’s portfolio? Let’s break it down with a closer look at the stocks he’s sticking with.
Coca-Cola
Coca-Cola has been one of Buffett’s most famous investments for decades. Here’s why he still holds such a significant position:
- Long-Term Holding: Buffett first bought shares in Coca-Cola in the late 1980s. As of Q3 2024, Berkshire Hathaway holds 400 million shares, worth about $28.7 billion (Source: Yahoo Finance).
- Strong Brand Power: Despite shifting trends away from sugary drinks, Coca-Cola’s broad product range—including water, tea, coffee, and energy drinks—keeps it growing.
- Massive Reach: More than 2 billion servings of Coca-Cola products are consumed daily around the world.
- Recent Stock Movement:
- Coca-Cola shares peaked at $73 but have pulled back to around $64.
- This dip brings the stock’s forward dividend yield to 3%, which is attractive for income-focused investors.
- Solid Dividends:
- Coca-Cola has raised its dividend every year for 62 consecutive years.
- The current quarterly dividend payout is $0.485 per share, which is about 68% of its expected full-year earnings.
- Berkshire’s Dividend Return: Berkshire Hathaway is set to earn $816 million in dividends over the next year from its Coca-Cola shares alone. Not a bad return on its original $1.3 billion investment (Source: 24/7 Wall St.).
Despite some short-term challenges, such as a small dip in sales volume, Coca-Cola’s consistency makes it an all-weather investment—and a stock Buffett is happy to hold onto for the long run.
American Express
Buffett’s affinity for American Express spans decades. Here’s why it remains a major part of Berkshire’s portfolio:
- Decades of Ownership: Buffett first bought American Express shares over 30 years ago and has never sold a single share since. By Q3 2024, Berkshire Hathaway owned 151 million shares, worth around $41 billion (Source: Yahoo Finance).
- Brand Strength:
- American Express cardholders tend to spend more than users of other credit cards, which means the company profits more from consumer spending.
- The company’s model essentially allows it to earn a “royalty” on the economy’s growth.
- Recent Financial Performance:
- Q3 2024: The company posted record revenue, growing 8% year-over-year (Source: American Express Investor Relations).
- Despite some economic headwinds, American Express remains a solid player in the financial space.
- Successful Product Updates:
- American Express refreshed 40 products in 2024 alone.
- A key update: new dining perks on the U.S. Consumer Gold Card helped boost restaurant spending by 7% year-over-year in Q3.
- Growing Customer Base:
- In Q3, the company added 3.3 million new customers, up from 2.9 million in the same quarter of 2023.
- Younger customers are sticking with American Express at higher rates than older generations, which bodes well for long-term growth.
- Stock Valuation:
- At 22 times the 2024 earnings estimate, the stock is getting a bit pricey compared to other financial firms, but its growth prospects keep investors interested.
It’s clear why Buffett keeps this one around—American Express isn’t just a staple in the credit card world, but a company that continues to evolve and grow its customer base.
What’s Next for Berkshire Hathaway?
Buffett’s investment philosophy has always been about finding great companies and holding them for the long haul. Even though Berkshire has sold some stocks this year, it’s important to note:
- No Sales of Coke or Amex: Buffett hasn’t sold any shares of Coca-Cola or American Express in over 25 years.
- Steady Earnings from Dividends: Both Coca-Cola and American Express are key sources of steady income, with Berkshire set to earn millions in dividends each year.
- Market Valuation Considerations: As stock prices rise, finding quality companies at sensible prices is getting harder. Still, Buffett has stuck with his core holdings, showing just how much confidence he has in these companies’ long-term potential.
So, while Berkshire Hathaway has been trimming its holdings in certain stocks, Coca-Cola and American Express aren’t going anywhere. These two companies represent stability and steady growth, even as the market gets more expensive. If you’re looking to understand Buffett’s strategy, these two stocks are prime examples of his approach to building wealth over time.
Alexander Clark is a financial writer with a knack for breaking down complex market trends and economic shifts. As a contributor to The Daily Overview, he offers readers clear, insightful analysis on everything from market movements to personal finance strategies. With a keen eye for detail and a passion for keeping up with the fast-paced world of finance, Alexander strives to make financial news accessible and engaging for everyone.
