Warren Buffett's Favorite Holdings: 3 Stocks Worth Owning for a Lifetime

Warren Buffett, at the helm of Berkshire Hathaway for six decades, constructed a long track record of investing success. And that's why investors have continually looked to him for inspiration. The Oracle of Omaha, as he's often called, led the Berkshire Hathaway portfolio to market-beating gains, delivering a compounded annual gain of nearly 20%. That's compared to the S&P 500's 10% compounded annual increase over that time period.

Of course, the portfolio hasn't looked exactly the same every year as Buffett bought and sold various stocks. But the billionaire, known for long-term investing, has held certain companies for many years -- and even decades. Buffett earlier this year handed his chief executive officer role off to Greg Abel, but as chairman, he still remains involved in the holding company.

Let's check out three of Buffett's favorites: They're worth owning for a lifetime.

Image source: The Motley Fool.

1. Coca-Cola

Warren Buffett, in his 1988 letter to shareholders, wrote about his recent purchase of Coca-Cola (NYSE: KO), saying he planned to hold onto the shares for "a long time" and that when he finds a good business, "our favorite holding period is forever." Buffett followed through on the plan as the Berkshire Hathaway portfolio still holds Coca-Cola shares, and they remain among the top positions as of the end of the first quarter -- in the third spot, to be exact.

Buffett surely likes Coca-Cola for two clear reasons: the company's solid moat, or competitive advantage, and its dividend payments. Coca-Cola's brand strength, as well as its deep distribution network, has kept the company in the lead year after year. Meanwhile, the company is a Dividend King, having increased its dividend payments for more than 50 consecutive years.

So, when you hold Coca-Cola shares, you'll benefit from steady earnings growth as well as passive income that's likely to increase over time.

2. American Express

American Express (NYSE: AXP) is another stock Buffett bought many years ago -- and it now is the second-biggest position in the Berkshire Hathaway portfolio. This leading payment card company has demonstrated strength over time, even in tough economic conditions. Since American Express generally serves high-income individuals and households, it's less vulnerable to economic downturns.

This has helped the company increase earnings over time, and in recent quarters, American Express is showing that it has what it takes to keep this strength going: It's seeing significant growth in younger customers. In the latest quarter, for example, 66% of global new customer accounts were from Millennial and Gen Z customers.

American Express is also a fantastic dividend stock, and its free cash flow level shows that it has the financial strength to continue along this path.

AXP Free Cash Flow data by YCharts

3. Apple

Finally, I'll talk about the No. 1 stock in Buffett's portfolio. He hasn't held it as long as Coca-Cola and American Express, but it still is clearly a long-term holding. And this is Apple (NASDAQ: AAPL), a stock Buffett originally bought in 2016.

Generally, Buffett doesn't invest in technology companies, but he makes exceptions when he finds a particularly well-run business with a fantastic moat. And this is the case with Apple. Buffett has publicly praised Apple chief Tim Cook for his accomplishments and for making Apple a great investment for Berkshire Hathaway.

But this growth story isn't over. The leadership Apple has built in the smartphone market and across devices, such as tablets, should keep paying off. And part of that may be due to the large installed base of active devices, at more than 2.5 billion today. These customers not only have purchased an Apple product, but they now are offering the company a recurrent stream of revenue.

This is through services, from digital entertainment to storage. Services revenue has exploded higher, reaching record levels quarter after quarter. All of this makes Apple a stock to hold onto for Buffett's favorite holding period: forever.

American Express is an advertising partner of Motley Fool Money. Adria Cimino has positions in American Express. The Motley Fool has positions in and recommends American Express, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.