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Warren Buffett is one of the greatest investors of all time. His investing skills have earned incredible returns for Berkshire Hathaway shareholders over the last 50 years, so it's a smart idea to consider what he is buying (or selling).

Let's look at two of Buffett's largest stock holdings that an investor with $500 can buy right now.

1. Coca-Cola

One of the common themes in Buffett's stock picks throughout his career is a preference for profitable companies that benefit from strong consumer brands, and Coca-Cola (NYSE: KO) is a prime example. People consume 2.2 billion servings of one of the company's beverage products every day. It's for this reason that Buffett has not sold a single share of Coke stock for more than 30 years.

Investors are not going to buy Coke stock for high growth. The stock has delivered a return of 105% over the last 10 years (including dividend reinvestment), trailing the S&P 500's return of about 240%. Buffett has stuck with Coca-Cola because it's a profitable business that enjoys consistent sales every year, and importantly, the stock pays a dividend that provides Berkshire passive income of $776 million per year.

However, there are a few reasons Coca-Cola could see accelerating growth. The business has experienced momentum in international markets. Management is directing more investment in marketing, innovation, and digital initiatives to capture this substantial growth opportunity. Statista projects worldwide revenue in the soft drink market to grow 9.5% annually through 2029.

Another factor that could juice shareholder returns is margin expansion. Coca-Cola has been refranchising its bottling operations, which has helped reduce operating costs and boost margins and earnings growth. Last year, the company's adjusted earnings grew a solid 15% on a currency-neutral basis.

Wall Street analysts expect Coke's earnings to grow at an annualized rate of 6%, but that could prove to be conservative. If Coke continues to report earnings growth above those estimates, the stock could offer attractive returns.

The shares are very reasonably priced at a forward price-to-earnings (P/E) ratio of 22, and with the share price sitting at around $62, Coke stock is affordable for any investor to buy today. Throw in an above average dividend yield of 3%, and shareholders could be looking at a nice return on investment.

2. Apple

Apple (NASDAQ: AAPL) has to be considered one of the best Buffett stocks to buy right now, since Buffett said at the 2023 annual shareholder meeting that Apple was a better business than any Berkshire owned, and it's not short of growth opportunities. Berkshire trimmed its position in the stock in the first quarter but still owned a massive stake worth $135 billion based on Apple's share price at the end of March.

The upcoming update to iOS will finally see Apple bring substantial artificial intelligence (AI) features to its devices that could drive strong growth and great returns for shareholders.

Buffett likes Apple for similar reasons as Coca-Cola. Apple is a strong consumer brand with more than 2.2 billion active devices in customers' hands. This gives Apple a large pool of customers to which it can cross-sell additional services, such as apps and subscriptions. Revenue from services grew 14% year over year last quarter to nearly $24 billion, comprising one quarter of the business.

With so many customers spending money on device upgrades and services every year, Apple has grown into a highly profitable business. It generated $101 billion in free cash flow over the last year and should continue to grow that total over time. The upcoming Apple Intelligence feature for iOS could drive higher iPhone sales, as the stock recently surged to new highs following the announcement.

Of course, Buffett is also drawn to companies that have shareholder-friendly capital return policies. The growth in free cash flow is paving the way for years of dividend payments to shareholders. Apple offers a small yield of just 0.43%, but based on Apple's current payout, Berkshire should receive $789 million in dividend payments over the next year.

Apple stock trades at an expensive-looking forward P/E of about 35, but analysts are expecting accelerating earnings growth over the next few years based on the growing demand for AI-enabled devices. With shares currently priced at $228, an investor with less than $500 can buy one share of Apple and invest the rest in Coca-Cola for more passive income.

Should you invest $1,000 in Coca-Cola right now?

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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.