3 Top Buffett Stocks to Buy and Hold for the Long Haul

Key Points

• Amazon Web Services will continue to bring in massive profits for Amazon.

• Occidental Petroleum's management does things the right way, Buffett says.

• Bank of America has a sticky customer base, dependable earnings, and a solid dividend.

• 10 stocks we like better than Amazon ›

Warren Buffett's investing career is one of legend. The Oracle of Omaha took over what was a struggling textile company 60 years ago and turned it into a mammoth conglomerate with a market capitalization of more than $1 trillion -- making it one of less than a dozen companies that have reached that milestone.

While Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) is heavily involved in insurance, railroads, utilities, and energy, the company derives a significant fraction of its value from its investment portfolio, which is today worth more than $300 billion. Right now, it includes positions in more than 40 companies.

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Buffett's investment strategy is fairly simple. He favors companies with strong management teams, dependable earnings, secure positions in their industries, and ideally, strong dividends. Once he finds such companies, he prefers to hold his investments in them for long periods.

That strategy has worked marvelously -- from 1965 to 2024, Berkshire Hathaway's share price grew at a 19.9% compound annual rate, compared to a 10.4% compound annual rate for the S&P 500 (when factoring in dividend reinvestment). Over the years, that outperformance has added up monumentally. An investment made in the S&P 500 in 1965 would have grown in value by 390 times. The same investment in Berkshire Hathaway would have grown by more than 55,000 times.

Though Buffett's retirement as CEO looms at the end of this year, Berkshire's portfolio still reflects his timeless principles. And these three holdings -- Amazon (NASDAQ: AMZN), Occidental Petroleum (NYSE: OXY), and Bank of America (NYSE: BAC) -- stand out as stocks that are likely to be long-term winners from here.

Image source: The Motley Fool.

Amazon

Buffett has famously acknowledged his regret that Berkshire didn't invest in Amazon sooner. But Berkshire rectified that error in 2019 by taking a $900 million stake in the e-commerce giant. Today, its position is worth close to $2.3 billion.

Amazon, of course, has changed a lot over the years. It got its start as an online bookseller and evolved into an e-commerce titan that ships and sells nearly all types of goods all over the world. Amazon had $391.4 billion in retail sales in 2024, second only to Walmart, and its rise forced brick-and-mortar companies around the world to create their own e-commerce divisions just to compete.

However, the secret sauce to Amazon stock is its powerful cloud computing division. Amazon Web Services (AWS) is the biggest cloud computing service on the planet, with a 30% share of the global market (almost as much as No. 2 Microsoft and No. 3 Alphabet combined). AWS generated $10.16 billion in profits in the second quarter -- more than all of the profits brought in by the much-larger e-commerce division. In fact, AWS accounted for 55% of Amazon's net income despite bringing in just 18% of the company's revenue.

As more companies turn to cloud computing for their IT infrastructure, AWS will continue to drive Amazon's profits.

Occidental Petroleum

While it's true that Buffett generally favors companies that have market superiority, Occidental is an outlier. The integrated oil and natural gas company is much smaller than rivals ExxonMobil and Chevron, but Berkshire Hathaway has over time built up a 26.9% stake in Occidental.

That's in part because it ticks another box on Buffett's checklist -- he loves how its management team runs it. Buffett has said he was sold on Occidental after reading the company's earnings call transcript in 2022. "I read every word, and said this is exactly what I would be doing," he said.

By that point, Buffett already had a vested interest in Occidental: Berkshire bought $10 billion worth of its preferred stock to help it finance its 2019 purchase of Anadarko Petroleum. That was a classic Berkshire move because the terms of the preferred stock deal required Occidental to pay Berkshire Hathaway an 8% dividend -- and Buffett loves dividends.

But Berkshire's additional purchases since 2022 show that Buffett still believes in Occidental's future. That should signal to retail investors that it's an ideal buy-and-hold energy stock.

Bank of America

If Occidental is Buffett's favorite energy stock, then it's safe to say that Bank of America is his favorite bank stock. Berkshire Hathaway owns 605 million shares of Bank of America stock -- a stake worth more than $30 billion. That's roughly 10% of Berkshire's entire stock portfolio.

The Charlotte-based financial giant is the second-largest bank in the country by assets, with 69 million consumer and small-business clients, 3,700 locations, 15,000 ATMs, and a digital presence that serves roughly 59 million people.

Its diverse revenue streams come from consumer banking, corporate lending, wealth management, mortgages, and auto loans. Its revenue rose 4% year over year in the second quarter to $26.5 billion. Net income of $7.1 billion was up from $6.9 billion a year ago.

Bank of America also pays a dividend that yields 2.2% at the current share price, and those shares are fairly valued at a price-to-earnings ratio of just 14.8. Its value, dividend, and consistent earnings make it a classic Buffett stock to buy and hold.

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Bank of America is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Chevron, Microsoft, and Walmart. The Motley Fool recommends Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.