Which Berkshire Hathaway Investment might be Profitable in 2025: Coca-Cola or Domino's Pizza?
Warren Buffett, renowned investor, often advises followers to invest in "boring" stocks, like the ones in his diverse portfolio.deviating from the trendy tech stocks. His portfolio includes a myriad of dividend-paying consumer goods stocks, such as Coca-Cola and Domino's Pizza.
Investors new to the stock market would be smart to consider Buffett's recommendations over chasing the next big tech stock. However, there's a time and place for both. Embracing diverse investments is the essence of strategic portfolio management.
Coca-Cola, Buffett's longest-held stock and a favorite, has been a part of Buffett's holding company's portfolio since 1985. Berkshire Hathaway owns 9.3% of the company, with it comprising 8.4% of their total portfolio, making it their fourth-largest position.
The global beverage giant's allure lies in its unrivaled brand presence, extensive distribution network, and dual packaged drink and concentrate businesses for away-from-home venues. Even in the face of inflation, Coca-Cola's pricing power allows it to periodically raise prices. Although inflation pressure might begin to ease up in 2025, its brand remains its biggest asset.
Coca-Cola's enduring strength is further demonstrated by its status as a "Dividend King," having raised its dividend annually for the past 62 years. Despite global uncertainties, such as hyperinflation, economic instability, pandemics, and more, Coca-Cola has consistently increased its dividend and created value for shareholders.
As a global company, Coca-Cola is not limited by regional challenges, making it an incredibly durable and committed entity. In 2024, the stock experienced a 6% increase in value. At the current price, its dividend yields 3.1%, providing a stable income stream for investors.
On the other hand, Buffett made a less significant investment in Domino's Pizza earlier in 2024. Berkshire Hathaway now owns 3.7% of Domino's outstanding shares, representing just 0.2% of their total portfolio.
Domino's, sometimes referred to as the "Coke of the pizza industry," possesses a powerful global brand and low-cost offerings that make it fairly resilient during economic volatility. Its franchise model, which involves selling franchises rather than just pizza, typically offers higher margins.
Although Domino's experienced a small price increase in 2024, it doesn't match Coca-Cola's growth. However, its growth trajectory is increasingly promising. Domino's has consistently raised its dividend since 2013, and its dividend has grown significantly faster than Coca-Cola's. Although it lacks Coca-Cola's extensive track record, its affordability and growth potential make it an interesting option.
Despite their differences, both Coca-Cola and Domino's compete on a P/E ratio of 26. Although Domino's has followed a slower and shorter growth trajectory, investing in either stock in 2025 implies that they will be well-prepared to yield long-term shareholder value, regardless of market conditions.
However, Coca-Cola's steadfast track record, coupled with a more substantial dividend yield, makes it a potentially better long-term investment option. By selecting Coca-Cola, investors invest in more certainty and stability, two characteristics that contribute to strong, long-term stock performance.
Investors looking to emulate Buffett's approach might consider allocating part of their portfolio to steady dividend-paying stocks like Coca-Cola or Domino's Pizza. Such investments in finance can provide a consistent money flow, reflecting the importance of diversifying one's investing strategy.
Regarding Domino's, its lower percentage in Buffett's portfolio may suggest a more minor role in his overall investing strategy, demonstrating the emphasis he places on long-term, established companies like Coca-Cola for significant investments.
