Warren Buffett Has Backed This Investment for Decades, and History Keeps Proving Him Right

Warren Buffett is known to have said that his favorite holding period is "forever." Even so, you should know that Berkshire Hathaway's (NYSE: BRKA) (NYSE: BRKB) famous former CEO and chief stock picker has sold more of the conglomerate's equity holdings than he's held on to. But rightfully so. If a company changes in a way that makes it no longer worth owning, the smart move is to move on.

And that's what makes one particular Buffett pick even more special. It's not just one that Buffett stuck with while dozens of others came and went. It's now Berkshire's longest-held and third-biggest trade, with no exit of position on the horizon. It might be a good fit for your portfolio as well.

That stock is Coca-Cola (NYSE: KO).

Image source: The Motley Fool.

Worth the wait

Warren Buffett first began buying then-beaten-down shares of the beverage giant back in 1988, incrementally adding to what would eventually become a 400-million-share stake by the end of 1989. The number of shares hasn't grown since then, since Buffett elected to take the stock's dividend in cash rather than reinvesting those payments in more shares of the company paying them.

Nevertheless, patience has paid off. This stock's grown from a (split-adjusted) price of less than $5.00 at the end of 1989 to more than $82 apiece now -- a 1,580% gain that's made Berkshire's holding in the iconic company worth $33 billion.

Then there's the dividend itself. Coca-Cola has raised its per-share dividend payment every year for the past 64 years. Buffett's initial investment of less than $2 billion is now generating annual dividend income of nearly $850 million, which is added to Berkshire's cash stockpile to be deployed in any number of ways that current CEO Greg Abel sees fit.

A mindset to mimic

This isn't to suggest that every "forever" stock you buy should be blindly held forever, either. As noted, Warren Buffett has sold far more of the picks that he made for Berkshire Hathaway than he's held on to. Something clearly changed with all the names he was willing to let go of after buying them.

The takeaway, rather, is that Warren Buffett identified a resilient, market-leading company with enduring competitive advantages and a stock that was deeply discounted. He took action when few others would, and then let time do what time always does. That's how to weed out the winners from the laggards.

The thing is, the whole time Buffett himself was pruning Berkshire's weaker holdings, he was also proving that not every pick you make needs to be a mega-winner for you to do very well. As he conceded in his 2022 letter to Berkshire Hathaway shareholders, "Our satisfactory results have been the product of about a dozen truly good decisions -- that would be about one every five years -- and a sometimes-forgotten advantage that favors long-term investors such as Berkshire."

It also helps, of course, that Buffett's first rule of investing has always been "don't lose money," even when a pick doesn't work out as hoped.

In any case, if you've got your eye on it, Coca-Cola is still the same resilient company today that it was all the way back then. If you're looking for a quality pick, the fact that Berkshire continues sticking with this long-held stock speaks volumes about its quality.

James Brumley has positions in Coca-Cola. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.