One of Warren Buffett's core investment tenets is to buy high-quality companies that possess economic moats. Having durable competitive strengths helps a business defend itself against existing rivals and new entrants to the industry. Look at Berkshire Hathaway's massive $277 billion public equity portfolio and you'll see this philosophy on full display.

The conglomerate has a stake in dozens of companies, but Buffett's firm owns 400 million shares of one top dividend stock. Is it a must-buy in May?

Steady performance in uncertain times

Based on the stock market's performance in 2025, investors are worried that economic conditions will worsen, and a recession could be coming soon.

This backdrop isn't that much of a concern for Coca-Cola (KO -1.76%), the beverage giant that Buffett seems to love. The company exceeded Wall Street estimates in Q1 2025 (the three months ended March 28), reporting $11.2 billion in adjusted revenue, which was flat compared to the year-ago period.

Management follows volume trends closely. Coca-Cola sold 2% more unit cases during the quarter than in Q1 2024. Countries like India, China, and Brazil were called out as strong markets. It's also worth mentioning the star of the show, Coca-Cola Zero Sugar, an extremely popular product that saw 14% volume growth globally.

In typical fashion, Coca-Cola flexed its pricing power. Volume might not see much expansion potential, due to the company's presence in virtually every corner of the world. However, Coca-Cola's brand is so powerful, contributing to its moat, that it benefits from tremendous customer loyalty. There was a positive 5% effect due to favorable pricing and mix in the quarter.

Huge profits fuel dividends

Coca-Cola might be known for selling over 200 different beverage products. But it's important to know that the business relies on third-party partners to handle bottling and packaging. The result is an extremely profitable operation.

After posting a stellar 22.6% net income margin in 2024, Coca-Cola's bottom line expanded with a 29.9% margin in Q1. This setup is extremely beneficial for Buffett and Berkshire.

Coca-Cola is a dividend powerhouse. In February, the executive team raised the quarterly payout, keeping a streak of a jaw-dropping 63 straight years of increases alive. Given how profitable the company is, there's minimal risk this income stream will go away anytime soon, if ever.

Berkshire's 400 million shares bring in $204 million in passive income every quarter. Annualized, that figure jumps to $816 million. Understandably, Buffett has never sold a share since first buying a stake in the business in 1988. Coca-Cola has done a fantastic job at quenching the Oracle of Omaha's thirst for a safe, steady, and reliable income stream.

Don't expect market outperformance

Most would agree that Coca-Cola can provide stability to a portfolio. Investors might want nothing more in today's market environment.

But to be clear, don't expect the stock to generate market-beating returns over the long term. Coca-Cola has dramatically underperformed the S&P 500 in the past five and 10 years, and I don't believe this trend will change.

The price-to-earnings ratio currently sits at 29.3. This is close to the most expensive level in the past 12 months. This valuation is no doubt elevated when you consider earnings per share are projected to increase at a compound annual growth rate of 6% between 2024 and 2027.

Only income investors will find the stock a must-buy in May, as the dividend yield is 2.82%. By doing this, you'll be following in Warren Buffett's footsteps. However, Coca-Cola won't provide meaningful capital appreciation.