2 Buffett Stocks to Load Up On—And 1 to Ditch

Key Points

• With 64 consecutive years of dividend increases and a yield of 2.89%, it's difficult to argue with Coca-Cola's reputation as a strong buy-and-hold candidate, even despite concerns surrounding inflation.
• Visa's operations may give it an advantage over some of its competitors in the face of possible credit card interest rate limits.
• Bristol Myers Squibb retains many attractive qualities for investors, but near-term pressures from Medicaid changes and patent cliffs could be an issue in the coming quarters.

Warren Buffett made some substantial changes to the Berkshire Hathaway Inc. NYSE: BRK.B portfolio in the first quarters of 2025, including selling off some $4 billion in Apple Inc. NASDAQ: AAPL shares in order to amass a major cash and Treasuries reserve.

While investors chasing Berkshire's 13F filings in an attempt to mimic Buffett's trades have to reckon with the fact that they're receiving limited, out-of-date information, there is still an argument to be made that following in the Oracle of Omaha's footsteps before departing from Berkshire is a pretty good move.

Some of Buffett's long-standing portfolio positions, including stalwarts like The Coca‑Cola Co. NYSE: KO and Visa Inc. NYSE: V, may be worth a closer look for everyday investors heading into the new year. On the other hand, investors may find that it's time to sell a company like Bristol Myers Squibb NYSE: BMY that was, for a period several years ago, associated with Buffett.

Coca-Cola Is a Proven Dividend Stock For Good Reason

One criticism of Coca-Cola, one of Berkshire's most famous buy-and-hold positions, is that its valuation is less attractive than that of some alternatives.

While this may be true, investors should note that, with a price-to-earnings (P/E) ratio of 23.8, the company is at or below the level it's been at for much of the last two years.

Outside of this concern, Coca-Cola has many strengths. It possesses incredible pricing power, allowing it to adapt as effectively in periods of high inflation and helping keep cash flow strong. 

The company delivered sizeable profits and a 4-cent earnings per share (EPS) beat in the last reported quarter, and with lots of cash on hand, it should be no problem for Coca-Cola to keep raising its dividend regularly.

Speaking of, with a 2.89% dividend yield and a history of consecutive dividend increases spanning more than six decades, Coca-Cola remains a top contender among long-term passive income generators for hands-off investors.

The expected IPO of its Indian bottling subsidiary, which could raise $1 billion in proceeds, is another bonus for investors in the next few years.

Visa's Niche Within the Credit Card Landscape Gives it a Crucial Advantage

With talk of credit card interest rate limits potentially increasing, it may seem like a counterintuitive time to go in on a stock like Visa. 

However, this firm stands apart from some of its competitors thanks to its relatively minimal exposure to interest rate fluctuations—Visa primarily generates revenue through transaction fees rather than by lending.

So long as consumers continue to pay with Visa-branded cards, the company's top line shouldn't face rate risks as severe as those of its peers. Given that affordability concerns are likely to continue pushing customers toward credit, Visa could be particularly well-positioned this year.

The company also has benefits, including strong margins and a lower valuation relative to others in the industry.

For the fourth quarter of fiscal 2025, ended Sep. 30, Visa beat analyst predictions on both earnings per share (EPS) and revenue, and Wall Street expects another 13% in earnings growth in the year to come. As its services continue to expand and it supports fast-growing stablecoin-linked programs, Visa still has room to grow.

Near-Term Healthcare Uncertainty and Patent Headwinds Challenge Bristol Myers Squibb

Investors may think of biopharma giant Bristol Myers Squibb as a Buffett holding, but in actuality, Berkshire only owned a stake in BMY for a short period and exited its position several years ago.

Investors who are still holding on cite reasons like the competitive dividend yield, a number of brands with revenue topping $1 billion, and a strong balance sheet.

Still, now may be a time to exercise caution, particularly given two factors: broader challenges to the healthcare field including major changes to Medicaid introduced via the One Big Beautiful Bill Act, as well as patent cliffs related to its popular blood thinner Eliquis and immunotherapy drug Opdivo.

BMY may still be a very worthwhile investment for those with a long time horizon.

More active investors, however, might expect some pressure on its cash flow and top- and bottom-line results in the quarters to come as a result of these factors.