“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett, letter to shareholders, 1988
Warren Buffett’s business philosophy is straightforward: buy wonderful businesses and hold on for the long haul. It’s a simple formula that made him the most successful investor ever.
But where do you find these wonderful businesses? Well, it never hurts to peek over the Oracle’s shoulders. Here are three Buffett holdings that deserve a permanent place in your portfolio.
1. The Coca-Cola Co.
The Coca-Cola Co.’s (NYSE: KO) profits have gone flat. Consumers around the world are dropping sugary sodas for bottled water and other natural beverages. That’s why sales volumes were only up a lackluster 1% year-over-year last quarter.
But investors shouldn’t fret too much over short-term hiccups. Coca-Cola has seen plenty of ups and downs in the past. Yet through it all, the firm has increased its dividend 52 years in a row.
A proven long-term performer like Coke benefits from a giant distribution network, unrivaled brand recognition, and abundant financial resources. The company certainly has the means to adapt to the changing habits of consumers.
2. United Parcel Service, Inc
United Parcel Services Inc (NYSE: UPS) is one of those classic Buffett stocks that marries the old with the new. The firm has already proven its mettle. But arguably, its best days might still be ahead.
The company is at the center of two trends I feel comfortable predicting. First, there will be more people living in the United States. And second, those people will continue to purchase more products over the Internet.
Together, these provide a nice tailwind for UPS over the next 100 years. That means more earnings, more dividends, and more buybacks for shareholders.
3. Suncor Energy Inc
Alberta’s oil sands contain some 174 billion barrels of crude. That’s close to four times America’s total reserves and nearly half of the world’s oil available to private investment. And one company owns most of it: Suncor Energy Inc (TSX: SU)(NYSE: SU).
Suncor has the largest resource base in the oil sands. Because the company has such size and scale, it can squeeze huge profits out of each barrel it hauls out of the ground. This has allowed Suncor to more than double the size of its dividend over the past three years.
And this could just be the beginning. Based on today’s production levels, the company is sitting on enough reserves to stay in business for well over a century. That’s the kind of long term certainty Warren Buffett loves.
