Warren Buffett's Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) has been selling stocks at a higher clip than usual this year. Through the first three quarters of 2024, Berkshire sold $133 billion worth of stocks. This mostly reflects recent sales of Berkshire's largest holding, Apple, but it also trimmed its Bank of America stake, which has also been a sizable investment for Berkshire in recent years.
Here's Berkshire Hathaway's top four holdings at the end of Q3 and each position's market value:
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Apple: $69.9 billion
American Express (NYSE: AXP): $41.1 billion
Bank of America: $31.7 billion
Coca-Cola(NYSE: KO): $28.7 billion
At Berkshire Hathaway's 2024 shareholders' meeting, Buffett mentioned that he found it "quite attractive" to build a larger cash position with the stock market continuing to rise. Valuations have gotten more expensive, which is limiting the pool of quality businesses selling at sensible prices.
With the stock market sitting close to new highs, it's more telling what stocks Buffett is not selling. While Buffett unloads Apple and Bank of America, it's noteworthy that he has not sold a single share of Coca-Cola or American Express in over 25 years.
1. Coca-Cola
Coca-Cola is one of Berkshire's longest-held investments. Buffett originally bought the stock in the late 1980s and bought more shares in 1994. Berkshire still holds 400 million shares after stock splits, worth $28.7 billion at the end of Q3.
Buffett places a high value on Coke's brand. Despite shifting consumer preferences away from sugary carbonated beverages, the company has continued to drive growth across a large lineup of water, tea, coffee, energy, and other carbonated beverages. There are over 2 billion servings of the company's products consumed every day, which translates to consistent revenue and profits.
After reaching a 52-week high of $73, Coca-Cola shares currently trade around $64. The pullback has brought the stock's forward dividend yield to an attractive 3%. The above-average yield on top of Coke's growth opportunities certainly makes the stock a tempting buy on the dip.
The stock fell after the company posted a 1% year-over-year decline in unit case volumes. Coke is feeling the sting of macroeconomic headwinds that have made consumer spending unpredictable this year, but these are near-term problems that the company can navigate through as it has before.
Coke has paid a growing dividend for 62 consecutive years with a current quarterly payout of $0.485 per share, representing 68% of expected full-year earnings.
Berkshire is set to make $776 million over the next year from those dividends, which is not a bad return on Berkshire's original $1.3 billion investment. Regardless of how the stock performs in 2025, investors are getting paid a generous yield from a solid business with steady annual sales, making Coke stock an excellent all-weather investment.
2. American Express
Berkshire Hathaway has held shares of American Express for 30 years. Buffett last added to the position in 1998 and has held on ever since. In Q3, the company held over 151 million shares worth $41 billion.
Buffett favors American Express for the same reason as Coca-Cola. It benefits from strong brand power, and because Amex cardholders spend more on average than other credit card brands, American Express ultimately benefits from the growth of the economy. Its spend-centric business model means investors are basically earning a royalty on consumer spending.
Despite recent headwinds in consumer spending, American Express has delivered solid financial results, with third-quarter revenue reaching a new record and growing 8% year over year. Investors are high on the company's prospects, with the stock sitting close to new highs.
American Express is having success with the recent refresh of its cards and member benefits. Through the third quarter, it had refreshed 40 products. The company added new dining perks to the U.S. Consumer Gold Card that helped drive a 7% year-over-year increase in restaurant spending last quarter.
Despite decades of growth, the business continues to find new customers. It acquired 3.3 million new customers in Q3, up from 2.9 million in Q3 2023. It's a great sign for the brand's long-term growth prospects that the retention rate of younger customers is exceeding older generations.
The Wall Street consensus has the company's revenue growing 9% this year, while earnings should be up an impressive 24%. The stock is trading at 22 times 2024 earnings estimates, which is bordering on the expensive side for a financial services company. Investors might want to wait for a better price before investing in American Express, but it's easy to see why Buffett continues to love this top credit card brand.
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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. John Ballard 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.
