If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally thousands of loyal fans who are investors. Known for his long buy and hold strategies and his massive portfolio of public and private holdings, he remains one of the preeminent investors in the world.
[in-text-ad]
With the market churning this year, up 2% and then back down 2%, and with interest rates rising and inflation raging at the highest levels in 40 years, we thought it important to look at the five stocks that pay solid dividends and make up over 75% of the Berkshire Hathaway portfolio.
The five top stocks that make up the bulk of this portfolio are solid picks for worried investors now. Naturally, all are rated Buy by top firms across Wall Street. It is important to remember, though, that no single analyst report should be used as a sole basis for any buying or selling decision.
American Express
This stock can perform extremely well in a rising interest rate environment and makes up almost 8% of Berkshire Hathaway. American Express Co. (NYSE: AXP) provides charge and credit payment card products and travel-related services worldwide. Its products and services include payment and financing products network services accounts payable expense management products and services, and travel and lifestyle services.
The company’s products and services also comprise merchant acquisition and processing, servicing and settlement, point-of-sale marketing and information products and services for merchants, and fraud prevention services, as well as the design and operation of customer loyalty programs. It sells its products and services to consumers, small businesses, midsized companies and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams and direct response advertising.
Shareholders receive a 1.33% yield. Morgan Stanley has a $223 price target on American Express stock. The consensus target is $198.64, and the shares closed trading on Tuesday at $161.85.
Apple
It’s almost hard to comprehend that this legacy technology giant makes up a stunning 40% of the Berkshire Hathaway portfolio. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics and computers, and it has developed its own proprietary iOS and Mac OS X operating systems and related software platform/ecosystem.
Revenues are principally derived from the iPhone line of smartphones, the Macintosh family of notebook and desktop computers, iPad tablets, iPod portable digital music players, and the Apple Watch. The company also realizes revenue from software, peripherals, digital media and services. The technology giant has consistently churned out new products that the public loves, and an inexpensive iPhone is one of the newest offerings.
Apple stock investors receive a 0.63% dividend. J.P. Morgan’s price target is $200, and the consensus target is $190.20. The stock closed on Tuesday at $149.24.
24/7 Wall St.Bank of America
The company posted very solid first-quarter results and is the second-largest holding at Berkshire Hathaway. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.
Shareholders receive a 2.41% dividend. The $53.50 J.P. Morgan target price compares with a $48.66 consensus target and the most recent close at $35.99. Buffett owns a stunning 1.1 billion shares of Bank of America stock.
[in-text-ad]
Coca-Cola
This remains a top Buffet holding, as he owns a massive 400 million shares. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.
Led by Coca-Cola, one of the world’s most valuable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.
Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Investors receive a 2.67% dividend. Truist Financial has set a $75 target price, well above the $69.86 consensus target. Coca-Cola stock closed at $65.78 a share on Tuesday.
Kraft Heinz
Even in tough times, everyone has to eat, and this company stands to benefit. Kraft-Heinz Co. (NASDAQ: KHC) was formed six years ago via the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion of annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House.
This is the third-largest food and beverage manufacturer in North America, deriving 76% of revenues from that market and 24% internationally. Additional brands include Oscar Meyer, Maxwell House, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.
Buffett holds a massive position in Berkshire Hathaway of 325 million shares, which is a stunning 26.6% of the company’s stock float.
Shareholders receive a 3.63% dividend. Kraft Heinz stock is on the BofA Securities US 1 list of top picks and the firm’s price target is $48. The consensus target is $43.17, in line with Tuesday’s close at $43.16.
Given Buffet’s proclivity for only owning the stock of companies that he understands inside and out, these all make sense now for growth and income investors worried about the potential for a steep market decline. While they could sell off in a large correction, they will hold up far better than most.
Sponsored: Want to Retire Early? Here’s a Great First Step
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
