12 Best Long-Term Stocks to Buy According To Warren Buffett

4. The Coca-Cola Company (NYSE:KO)

Warren Buffett’s First Major Purchase: 2010

Berkshire Hathaway’s Latest Investment Stake: $25.46 Billion

Number of Hedge Funds Holding Stakes as of Q2: 68

The Coca-Cola Company (NYSE:KO) is one of Buffett’s most extended holdings, and Buffet has always diversified his portfolio into the beverage sector as a consumer defensive investment play. The company is best known for the manufacturing, marketing, and selling of various nonalcoholic beverages worldwide.

The Coca-Cola Company (NYSE:KO) is one of the best long-term stocks to buy, according to Warren Buffett, owing to its powerful brands that allow it to navigate any economic cycle while generating significant returns. While it is best known for Coke, it also owns brands like Powerade, sports drinks, Minute Maid juices, Costa coffee, Gold Peak tea, Dasani water, and Bar’s root beer.

The company does not bottle or distribute all its beverages. Instead, it outsourced to third-party bottlers. The model leads to much less revenue for Coca-Cola but translates into more reliable profits and wider profit margins.

In the second quarter, the beverage juggernaut recorded $12.3 billion in revenues, marking a 3% increase compared to the previous year. The firm is recognized for its steady growth, expanding its net sales from $33 billion in 2020 to $46 billion by 2023. The Coca-Cola Company (NYSE:KO) has experienced a compound annual growth rate (CAGR) of 6% in revenue and 7% in free cash flow in the last five years.

The Coca-Cola Company (NYSE:KO) has been increasing its dividends for over 60 years, making it a prestigious Dividend Kings group member. Companies must have a strong track record of managing their finances to maintain membership in this group. They need to continuously increase their earnings per share (EPS) and free cash flow (FCF) even during economic downturns to be able to afford their growing dividend payments.

The beverage giant meets this threshold, therefore underlining why it is one of the best long-term stocks to buy, according to Warren Buffett. Currently, it pays a decent forward dividend yield of 2.72%

Along with Buffett, 68 hedge funds out of the 912 that were part of Insider Monkey’s database had bought the firm’s shares in Q2 2024. Berkshire Hathaway remained the biggest investor, holding $25.46 billion worth of shares.