The past few weeks have been tumultuous for the stock market and for investors. President Trump’s tariffs on imports have stoked worries about higher prices — and how that could affect the consumer’s wallet, corporate profits, and the overall economy. In a recent note, Goldman Sachs analysts predicted the tariffs could put almost a complete halt on economic growth.
At times like these, it’s a great idea to stock up on stocks that could weather any market storm and even offer you rewards such as dividend income regardless of the economic backdrop. And for ideas about which stocks to choose, you could take a look at Warren Buffett’s portfolio. The billionaire investor is known for selecting companies that generally excel over the long haul — and two in particular, which he’s held for decades, make fantastic stocks to buy now and hold through any market environment.
Let’s check out these Warren Buffett favorites.
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1. Coca-Cola
Buffett likes to drink the flagship beverage Coca-Cola (KO 0.34%) makes, but he may love holding shares of the company that makes it even more. The top investor bought Coca-Cola shares over a period of years in the late 1980s, and he’s held on to those 400 million shares ever since. It’s been the right move as the investment has brought him gains through share performance and dividend growth.
Coca-Cola paid Buffett a $75 million dividend back in the mid-1990s, and that climbed to $704 million by 2022. Of course, most of us don’t have the ability to invest nearly as much as Buffett, but dividend payments still could add up nicely for us over the years — or by reinvesting dividends, we can easily increase our holding of Coca-Cola. As a Dividend King, lifting payments year after year, Coca-Cola has proved that rewarding shareholders is an important part of its business, so it’s likely to continue along this path. And the company’s more than $4 billion in free cash flow means it has the financial strength to do so.
Investors also will like the world’s largest non-alcoholic beverage maker for its brand strength — a moat, or competitive advantage — that’s helped it maintain leadership over the years. In the most recent quarter and the full year, the company continued to gain share in the total non-alcoholic ready-to-drink market.
Since the start of the year, Coca-Cola shares have climbed about 13% even as the S&P 500 declined, suggesting investors seek everything this solid company has to offer during times of uncertainty. And the good news is, trading for 23 times forward earnings estimates today, they still make a reasonably priced buy.
2. American Express
American Express (AXP 0.48%), as a credit card company, may not seem like the first stock to buy when questions about higher prices and growth arise. But a look at the stock’s performance and revenue following the past few recessions shows it’s been pretty resilient, going on to quickly recover and gain. The shadowed areas in the following chart indicate recessions.
This revenue strength may be explained by the fact that American Express is a premium credit card company, generally serving customers with higher income levels — and this group may be less likely to cut spending during tough economic times than those with lower incomes. So while American Express may experience some pressure, it should be limited — and any declines in the stock could offer investors interesting buying opportunities. For example, amid today’s market declines, American Express has fallen too, dropping 10% since the start of the year. The stock now is trading at 17 times forward earnings estimates, down from more than 22 late last year.
American Express is another stock Buffett bought years ago and has held onto as revenue, share performance, and dividends increased. In fact, in Buffett’s 2023 letter to Berkshire Hathaway shareholders, he said he extended his decades-long “Rip Van Winkle slumber” concerning this stock and Coca-Cola as both lifted earnings and dividend payments.
The strong performance continues. The premium card company announced record revenue for 2024, up 10% on a foreign exchange-adjusted basis, to more than $65 billion. And record levels of new card acquisitions as well as the company’s success at signing on younger users — millennial and Gen-Z consumers — bode well for the future.
All of this makes American Express a fantastic — and bargain — Buffett favorite to get in on now and hold with confidence no matter what the economy does next.
American Express is an advertising partner of Motley Fool Money. Adria Cimino has positions in American Express. The Motley Fool has positions in and recommends Berkshire Hathaway and Goldman Sachs Group. The Motley Fool has a disclosure policy.