If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans that 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.
As we start April and the second quarter, investors will be relieved to know that historically April is one of the best months of the year. After a very rocky first three months of the year, that is probably music to everybody’s ears. Given that many fund managers and retail investors will be looking to reset portfolios for the new quarter, we decided to look at the five biggest holdings at Berkshire Hathaway. They all make sense now for investors looking for a degree of safety and for companies that can perform in a rising interest rate and inflationary environment and that pay reliable dividends.
While all five are top Warren Buffett holdings, and all are Buy rated at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Apple
It is almost hard to comprehend that the legacy technology leader 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.
This technology giant has consistently churned out new products that the public loves, and an inexpensive iPhone is one of the newest offerings. Revenues are principally derived from the iPhone line of smartphones, hardware sales of 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.
Shareholders receive a 0.50% dividend. J.P. Morgan has a $210 price target on Apple stock. The consensus target is $193.53, and shares closed trading on Thursday at $174.61 apiece.
Bank of America
Warren Buffett owns a stunning 1.1 billion shares of Bank of America Corp. (NYSE: BAC), which posted very solid fourth-quarter results and, like other banks, it welcomes interest rate increases.
Bank of America 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.
The bank 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 1.95% dividend. The J.P. Morgan target price of $53.50 compares with a $51.04 consensus target. Bank of America stock retreated over 4% on Thursday to close at $41.22.
American Express
This is another company that can perform extremely well in a rising interest rate environment, and it 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.
American Express stock investors receive a 1.10% yield. The $223 Morgan Stanley price target is well above the $187 consensus target. The shares closed trading on Thursday at $200.37.
24/7 Wall St.Coca-Cola
This company has remained a top Warren Buffet holding for years, and he owns a huge 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 2.84% dividend. BofA Securities has set a $70 target price. The consensus target for Coca-Cola stock is $67.39, and the final trade on Thursday came in at $62.00 per share.
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. It is the third-largest food and beverage manufacturer in North America, deriving 76% of revenues from that market and 24% internationally.
The company’s brands include not only Kraft and Heinz but also 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.
Shareholders receive a 4.06% dividend. The Kraft Heinz price target at BofA Securities is $48. The consensus target is lower at $40.79, and shares closed most recently at $39.39.
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