Investors have spent a lifetime trying to decode Warren Buffett’s investing philosophy, but the foundation of his approach has long been far easier than most consider, and it’s all about staying consistent. The companies Buffett likes to invest in don’t focus on hype or short-term cycles. Instead, they survive by delivering products and services people use every day, regardless of market conditions.
Ultimately, Buffett’s style of investing rewards patience, and it’s because of this that he has become not just one of the world’s best investors but also one of the richest people in history. His methodology rewards buying companies that compound over decades, not just a strong quarter here and there.
It’s this philosophy that Berkshire Hathaway was built around, and the stocks he has held the longest all share the same traits. Of course, Buffett is also looking for new companies that can meet this same criteria.
Why Buffett Gravitates Toward Businesses With Moats
Over time, the world has learned that Warren Buffett seeks companies that can defend their market positions. He’s long looked for brand strength, customer loyalty, scale advantages, and predictable cash generation. It’s these traits that have rewarded Buffett’s investments as his picks allow earnings to compound steadily and over time. Unsurprisingly, the world knows and watches as he also seeks consistent dividends, which Buffett has long argued is a clear sign that management is prioritizing long-term value creation.
It’s these companies below that reflect Buffett’s mindset, past and present, and each one has the exact right blend of stability, competitive strength, and reliable shareholder returns.
Coca-Cola
It’s hard to imagine a clearer example of Warren Buffett’s investing philosophy at work than it is with Coca-Cola (NYSE:KO). That Buffett has never sold a single share of Coca-Cola exemplifies his holding “forever” investment philosophy. Unsurprisingly, Coca-Cola is a company that sells beverages that people buy in both good and bad markets, so there is a steady demand that supports consistent cash flow and has long allowed this beverage favorite to maintain its long history of shareholder returns.
Currently, Coca-Cola is paying a dividend yield of 2.87% and an annual dividend of $2.04, all while providing shareholders with a 16.7% year-to-date return in 2025 and a 5-year return of 55.69%. It’s these numbers that prove Buffett’s belief that by keeping the business model simple, the Coca-Cola brand has remained globally dominant, all while focusing on shareholder returns as a central part of management’s philosophy.
American Express
Another cornerstone of the Berkshire portfolio, along with Coca-Cola, is American Express (NYSE:AXP), the company Buffett has refused to sell a single share of since he first purchased shares in 1991. Well, this story comes with a caveat, as he originally purchased in 1964 and sold his first $13 million investment in the company in 1968, making a 150% return. After purchasing again in August 1991, Buffett hasn’t sold a single share of this second investment, and it speaks to his favorite type of stock almost immediately. American Express has a moat from its closed-loop network, premium customer base, and global brand.
American Express also offers a 0.95% dividend yield, but an annual dividend of $3.28 per share, and the company has grown its dividend for the last three years straight, reflecting its strong profitability. That Buffett hasn’t sold any shares since 1991 is a definitive look at how Buffett looks at stocks that can protect themselves throughout different market conditions.
Alphabet
A more recent addition to Warren Buffett’s portfolio, the acquisition of Alphabet’s (NASDAQ:GOOGL) stock in the third quarter of 2025, indicates that his favorite type of stock hasn’t wavered. Having expressed regret for not investing in both 2017 and 2019 and for “blew it,” Buffett has made up for that mistake by purchasing almost $4.3 billion in Alphabet stock.
What makes this notable is that even against regulatory noise, Buffett sees what the best investors know in that Alphabet is a dominant force in search, cloud services, YouTube, email, and AI infrastructure. Revenue growth of 16% in Q3 2025 and strong EPS performance support Buffett’s view that Alphabet’s business is fundamentally sound. For shareholders, the 0.29% dividend yield and $0.84 dividend won’t jump out as making anyone rich, but the exceptionally low 8.29% percent payout ratio leaves plenty of room for future dividend increases, and it’s likely that Alphabet will want to raise the stakes as part of a multi-decade shareholder return strategy.
Ultimately, all three of these stocks reflect qualities that Buffett has long valued, and it’s these qualities that define his favorite type of stock. Coca-Cola, American Express, and Alphabet all sell or provide services people use every day, and they generate steady cash flow through every market cycle and reward long-term shareholders with dependable income and rising value. Buffett has shown for decades that durable brands and consistent earnings matter more than hype or headlines.