What an outstanding year it has been, after a dreadful 2022 that most stock investors are more than happy to see fade into the distance. With the S&P 500 up over 18% and the Nasdaq a stunning 34% higher after just seven months of trading, many would be thrilled if the year ended now. However, the economic past looks like it is catching up to the present day, and that could mean big trouble.
It is possible that the interest rate hikes are over. Yet, it is highly unlikely, given the strength in the economy and the fact that inflation could roar back at any moment, especially with oil prices up big over the past five weeks. While the artificial intelligence revolution that ignited the tech rally is here to stay, the initial excitement is cooling and some are taking big profits, and it may be time to move those profits to safer stocks.
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 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, Buffett remains one of the preeminent investors in the world.
We decided to take a look into the Berkshire Hathaway portfolio for companies that not only look poised to do very well this year but pay dependable dividends. We found seven that are ideal stocks for investors to consider now, especially in what could become a very volatile and nervous market. All are also rated Buy by top firms on Wall Street, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This integrated giant is a safer way for investors looking to get positioned in the energy sector, and shares have backed up nicely. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide. The company sports a sizable dividend and has a solid place in natural gas and liquefied natural gas (LNG).
The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with LNG; transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operates a gas-to-liquids plant.
The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives. It is also involved in the cash management and debt financing activities; insurance operations; real estate activities; and technology businesses.
Chevron stock comes with a 3.72% dividend. Goldman Sachs has a $182 target price, while the consensus target is $168.48. The shares closed on Thursday at $159.67.
This top bank has rallied nicely off the lows and Buffett bought $2.5 billion worth of stock back in the summer of 2022. 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.
Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. And it operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
Trading at a still cheap 7.3 times estimated 2023 earnings, Citigroup looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.
Investors receive a 4.38% dividend. Wells Fargo’s $60 price target is a Wall Street high. Citigroup stock has a $57.27 consensus target, and shares closed on Thursday at $46.21.
This stock not only offers safety but comes with an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It remains a top Buffet holding, as he owns a massive 400 million shares.
Led by Coca-Cola, one of America’s most trusted food and drink 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.
Shareholders receive a 2.98% dividend. The $74 HSBC target price for Coca-Cola stock compares with a $63.56 consensus target and Thursday’s $61.64 closing share price.
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This is one of the largest producers of alcoholic beverages in the world. 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.
Diageo’s 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.
The dividend yield here is 2.08%. BofA Securities has set a $196 price target, and the consensus target is $184.01. On Thursday, Diageo stock closed at $170.82.
This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less. Kroger Co. (NYSE: KR) operates as a retailer in the United States with a focus on combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.
Its combination 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.
Kroger stock investors receive a 2.39% dividend. The BofA Securities target price of $65 is well above the consensus target of $50.92 and Thursday’s close at $49.40.
This consumer sector giant makes good sense for conservative investors. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and other grocery products.
The primary Mondelez brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.
Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.
Shareholders receive a 2.29% dividend. Mondelez stock has an $82 price target at Barclays. The $75.85 consensus target is nearer to Thursday’s close at $75.29 a share.
Procter & Gamble
The company offers a very solid dividend and a host of recognizable products. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products firms and one of the oldest companies 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.
Investors receive a 2.41% dividend. Wells Fargo’s price objective is $170. The consensus target is $166.03. Procter & Gamble stock was last seen on Thursday trading at $157.00.
These are seven sensible ideas for investors concerned that we could be ready to hit a rough patch in the 2023 rally. While none of these top companies are likely to explode higher like AI semiconductor stocks, all have been around forever and will still be standing tall after a market sell-off. Bear market rallies can come in staggering size, and it will be interesting to see if the move higher this year turns out to be one.
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