Warren Buffett capped a legendary career recently when he announced that he would be stepping down as CEO of Berkshire Hathaway at the end of the year. The multibillionaire and all-time investing great spent six decades leading the holding company to success, which grew into one of the world's largest companies.
Buffett is known for his long-term investment philosophies and willingness to hold winning stocks, even if they become significant portions of his portfolio. Just four winning stocks make up 57% of Berkshire Hathaway's $277 billion stock portfolio. Here they are, and why they are still excellent buy-and-hold candidates for any long-term investor.
1. Apple: Current value of Berkshire's stake: $59.5 billion
Buffett has referred to personal electronics giant Apple(NASDAQ: AAPL) as Berkshire's best business. Berkshire first bought the iPhone maker in 2016, and despite ringing the cash register a bit last year for a considerable profit, Apple remains Berkshire's largest holding. In Berkshire's latest shareholder meeting, Buffett even joked that Apple CEO Tim Cook, who personally attended the meeting, has made Berkshire more money than he ever did.
People depend on smartphones and other personal devices to communicate, surf the web, pay bills, and more. Apple's iOS ecosystem has become a juggernaut, with over 2.35 billion active devices worldwide. It's an ideal distribution channel through which Apple sells subscription services and collects fees on its App Store.
Apple, worth $3 trillion today, may not grow as it once did, but its staggering profitability and size enable jaw-dropping stock buybacks that set a pretty high floor for the stock.
2. American Express: Current value of Berkshire's stake: $43.1 billion
Warren Buffett has repeatedly praised the U.S. economy over the years. The American consumer is the U.S. economy's beating heart. Credit cards can get borrowers into financial trouble, but debt is a cultural staple in a country with over $1.2 trillion in total credit card debt.
American Express(NYSE: AXP) is a credit card company, bank, and payment processor with roots dating back to the 1800s. Today, the company is known for catering to high earners and businesses.
American Express is one of Berkshire's longest-standing holdings. Buffett purchased the stock for Berkshire in 1991 and has owned it since. American Express is likely not going anywhere as long as it is a financial staple in the world's largest economy.
The company's management has also noted success in winning over Gen Z and millennial consumers, who will carry the mantle of American consumerism over the coming decades. That makes the stock a no-brainer to buy and hold.
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3. Bank of America: Current value of Berkshire's stake: $28.4 billion
Buffett allegedly came up with the idea to invest in America's second-largest bank, Bank of America(NYSE: BAC), while soaking in the bathtub.
Berkshire struck a deal to buy preferred shares and stock warrants in 2011, ultimately cashing in and building a position in common shares in 2017. A bank stock like Bank of America, which has over $3.3 trillion in total assets, offers broad exposure to the economy because Bank of America deals in everything from commercial real estate to financial markets and mortgages.
It's worth noting that Bank of America may not be for everyone because bank stocks are sensitive to interest rates and recessions. Additionally, the reason Buffett's Bank of America investment worked out so well is primarily because he negotiated a deal that few individual investors would realistically have the ability or resources to do.
Still, Buffett has continued to hold Bank of America as one of Berkshire's most prominent holdings, a clear vote of confidence that helps it stand out among other banks.
4. Coca-Cola: Current value of Berkshire's stake: $28.2 billion
Global beverage behemoth Coca-Cola (NYSE: KO) is arguably the most famous Warren Buffett stock. There are countless photos of Buffett enjoying Coca-Cola products over the years. Berkshire first bought the stock in 1988, and it has been a model of consistency for the portfolio.
It's not the fastest-growing company you can invest in, but it has steadily grown for generations. Coca-Cola is a Dividend King with 62 consecutive annual dividend raises. Berkshire's stake pays out over $800 million in dividends annually!
Will that stop anytime soon? Don't count on it. Coca-Cola doesn't grow very fast, but it has virtually endless growth opportunities in a global economy with over 8 billion people. The beverage market is highly fragmented, so Coca-Cola can launch new products or acquire emerging competitors when needed.
Add it all up, and Coca-Cola is the tortoise that will slowly make you rich if you buy and hold it for decades, as Buffett and Berkshire have done.
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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
