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 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 entire world.
Even though the Federal Reserve has been raising interest rates at a breakneck pace for the past year, yields for the 10-year note and the benchmark 30-year bond are back to levels seen in early September, with only the short end of the Treasury curve above the 4% level. The reason for the safe-haven buying is simple: investors are worried. With massive layoffs, mega-cap companies missing earnings expectations, inflation (while cooling) still at the highest levels in years, and a geopolitical nightmare potentially brewing in the Russian-Ukraine war, now is the time for investors to play it safe.
We screened the Berkshire Hathaway portfolio looking for safe stocks that pay dependable dividends and are rated Buy across Wall Street. The following five look like good ideas for conservative investors worried about a continuation of the bear market and the potential for a recession. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Citigroup
This top bank has rallied nicely off the lows, and Warren Buffett bought a massive $2.5 billion worth of shares last summer. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations and governments a broad range of financial products and services.
It offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
Trading at a still very cheap 7.0 times estimated 2023 earnings, this one looks very reasonable in what remains a volatile stock market, and in a sector that has dramatically lagged. With multiple income sources at the bank still solid, this is perhaps one of best buys in the sector.
Shareholders receive a 3.92% dividend. Oppenheimer’s $83 price target is a Wall Street high. The consensus target is $57.80, and Citigroup stock closed on Wednesday at $51.90 a share.
Diageo
This is one of the world’s largest producers of alcoholic beverages, which typically never go out of favor. Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.
Its reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.
Diageo stock investors receive a 1.97% dividend. BofA Securities has a $203 price target, while the consensus target is $204.41. Wednesday’s closing share price was $184.36.
Kraft Heinz
Even in bad times, everybody has to eat, and this company always stands to benefit. Kraft Heinz Co. (NASDAQ: KHC) was formed almost six years ago in the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion in annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House. Buffett holds a big position in the stock at Berkshire Hathaway.
It is the third largest food and beverage manufacturer in North America and derives 76% of revenues from that market and 24% from overseas. The company’s other brands include ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.
Here, the dividend yield is 3.97%, and Kraft Heinz stock is on the BofA Securities US 1 list of top picks. The firm’s $48 price target is higher than the $42.92 consensus target and the most recent close at $39.95.
24/7 Wall St.Kroger
This grocery chain giant is always a solid idea when the going gets rough and people tend to eat out less. Kroger Co. (NYSE: KR) operates as a retailer in the United States. It operates combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.
Kroger’s food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood and organic produce. Its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.
The company’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys. The price impact warehouse stores provide grocery and health and beauty care items, as well as meat, dairy, baked goods and fresh produce items.
Kroger also manufactures and processes food products for sale in its supermarkets and online, and it sells fuel through 1,613 fuel centers. As of January 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.
Investors receive a 2.35% dividend. The $75 BofA Securities target price is well above the $53.42 consensus target for Kroger stock. The stock closed on Wednesday at $44.90.
Procter & Gamble
The company offers a very solid dividend as well as a host of recognizable products. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products companies and one of the oldest in the Fortune 500. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn.
The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores and pharmacies. The company has been very innovative in its product development process and uses that to help ensure future growth and cash flow. This should provide investors with years of steady growth and dividends.
Procter & Gamble stock comes with a 2.60% dividend. Raymond James has set its price objective at $170. The consensus target is $154.71, and shares were last seen on Wednesday trading at $141.72.
The market is teetering as much of the incoming data is negative, the aforementioned layoffs and earnings blow-ups are rattling investors, and the potential for more downside is robust. While the sell-side on Wall Street is always looking for the proverbial bright side, the reality is we could be on the precipice of a big move lower, and safe stocks are the way to go now.
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