Warren Buffett is probably the most famous investor alive today, attracting followers who want to replicate his success. But oddly enough, his portfolio is full of what the market would call “boring” stocks, which includes a small subset of what might be called technology stocks. It doesn’t have any young stocks or emerging stocks in technology or artificial intelligence (AI), and is full of dividend-paying consumer goods stocks.
Investors who get their feet wet in the stock market would be better off heeding Buffett’s advice and buying some of his favorites rather than betting on the next big tech stock. There is a place for that, if done responsibly. But there is also a place for a powerful global industry giant – and that is what diversification is all about.
coca cola(NYSE: KO) It is Buffett’s longest-held stock and one of his favorites, while… Domino’s Pizza(NYSE: DPZ) It is one of his latest acquisitions. Which is the best buy for 2025?
Berkshire HathawayBuffett’s holding company, Coca-Cola, first bought shares in 1985. Today, it owns 9.3% of the company, representing 8.4% of Berkshire Hathaway’s total portfolio, its fourth-largest position.
Buffett has explained on numerous occasions why he likes the king of beverages. It has an unparalleled global brand presence, delivering favorite beverages to masses of consumers around the world. It has a large and well-managed distribution network bringing drinks to all types of retailers, with a packaged drinks business as well as a focused business for destinations away from home such as restaurants and cinemas.
Although it faces pressure due to inflation, it has been able to successfully raise prices because of its brand and hence its pricing power. It may begin to decline this year as inflation moderates and consumers feel more comfortable in their spending habits.
One of Coca-Cola’s most compelling features is its profits. He is the king of profitsIt has raised its dividend annually for the past 62 years. When you think about everything that happened in the world during this time frame, starting in 1963, you can begin to imagine the kind of power that entailed. It covers periods of hyperinflation, economic instability, pandemics, and more.
Since Coca-Cola is a global company, the challenges are not limited to one region. This means that it has been able to navigate multiple regional events without skipping a year of increasing its profits and creating greater shareholder value. This is incredible durability and commitment.
Coca-Cola stock ended 2024 up 6%. At the current price, its dividend is 3.1%, and although there will be some general ups and downs over time, this is pretty much where it will land.
Buffett bought Domino’s shares for the first time this year, a small portion. Berkshire Hathaway has 3.7% of shares outstanding, and the position represents just 0.2% of its total portfolio.
Domino’s is like Coca-Cola in the pizza industry. It is the largest global pizza chain, operating in 94 global territories with more than 20,000 stores. Since it operates a franchise model, it actually sells franchises rather than pizza, which is a higher-margin business. Like Coca-Cola, it has global brand strength and, because it is reasonably priced, has greater resilience under pressure than fine-dining restaurants or luxury takeaways.
Unlike Coca-Cola, Domino’s is experiencing strong sales growth, including comparable sales growth, despite global economic fluctuations. It reported excellent results for its fiscal third quarter of 2024 (ending September 8), with a 5.1% increase in revenue compared to last year and a 5% increase in operating income.
Despite its massive size, it continues to open stores at a steady pace, with 800 to 850 new stores expected to open for fiscal 2024.
Domino’s also pays a dividend, and although it doesn’t have the same track record as Coke, its profits have grown much faster. It has raised its dividend annually since 2013, and has increased 655% since then, versus 73% for Coca-Cola.
Domino’s stock has been roughly flat in 2024, up slightly. Its dividend yield is 1.4% at the current price, or less than half of Coca-Cola’s earnings.
I think sometimes it’s hard to focus on what really makes a stock great, which is the ability to withstand and overcome tough times. This is Buffett’s forte. In other words, labeling this stock as the best stock of the year is actually a misnomer; Large stock at any time.
Picking one of these stocks for 2025 is an acknowledgment that whatever happens this year, the stock will be well positioned to create long-term value for shareholders. Each of these stocks fit the bill, and are trading at Same P/E ratio From 26.
Each of these stocks offers value to investors. However, in this contest, I would choose Coca-Cola due to its longer track record of reliability and higher dividend yields.
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Jennifer Seibel He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Domino’s Pizza. The Motley Fool has Disclosure policy.
