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12 Best Long-Term Stocks To Buy According To Warren Buffett

Tempo de leitura: 10 min

Escrito por
em June 7, 2021

Berkshire Hathaway now owns 22.2 million shares with a market value of around $2.6 billion. In many cases he purchased the companies outright, continuing to let their management teams handle the day-to-day business. A few of the better-known firms that fit into this category include See’s Candies, Fruit of the Loom, Dairy Queen, the Pampered Chef Ltd., Heinz, and GEICO.

With permission from the Federal Reserve Bank of Richmond, Berkshire Hathaway has increased its stake in Bank of America (BAC 1.51%) to more than 1 billion shares, or 12.5% of outstanding shares. Normally, a 10% stake or higher would qualify an investor like Berkshire Hathaway as a bank holding company. In 1965, Warren Buffett and his investment firm bought enough shares to take full control of the struggling company.

Businesses engaged in the manufacture and distribution of clothing include Union Underwear Corp. – Fruit of the Loom, Garan, Russell Corporation and Fechheimer Brothers. Fechheimer Brothers is made up of two brands, Flying Cross and Vertx. Flying Cross manufacturers public safety uniforms and Vertx is a civilian tactical clothing company. Justin Brands is made up of Chippewa Boots, Justin Boots, Justin Original Workboots, Nocona Boots, and Tony Lama Boots.[68] Berkshire acquired Fruit of the Loom on April 29, 2002, for $835 million in cash. Fruit of the Loom, headquartered in Bowling Green, Kentucky, is a vertically integrated manufacturer of basic clothing. Berkshire acquired Russell Corporation on August 2, 2006, for $600 million.

  • Though having $108 billion in cash and desire, no major acquisitions were made in 2018, but Berkshire purchased $43 billion in public securities, primarily Apple.
  • The warrants have been exercised and Berkshire holds 3% of the share capital of Goldman Sachs.
  • The only time that Berkshire Hathaway has paid a dividend was in 1967, to the tune of 10 cents per share.
  • He bought See’s Candy in 1972, a purchase that generated more cash flow for investing.

Buffett’s speeches are known for mixing business discussions with humor. Berkshire’s annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media. Buffett’s writings are known for containing quotations from sources as varied as the Bible and Mae West,[134] as well as advice in a folksy, Midwestern style and numerous jokes.

Using investment banks

However, it’s worth pointing out that because BNY Mellon also operating as an asset manager, lower interest rates have modestly pinched its profit potential. In many ways, Buffett’s portfolio is going to benefit when interest rates and yields start climbing. Bank of New York Mellon (BK 1.30%), the largest custodian bank in the world, rounds out the top 10. Although Kraft Heinz is benefiting from the pandemic — i.e., more consumers are eating at home — it’s arguably been one of Buffett’s worst investments. The Oracle of Omaha freely admits that Heinz overpaid for Kraft Foods in 2015. Further, American Express is what I call a “double-dipper.” In addition to processing credit transactions, it also acts as a lender, and is therefore able to collect interest income and fees from cardholders.

  • Coca-Cola is Berkshire’s oldest equity position—the firm first started buying KO in 1988.
  • At the peak of the financial crisis in September 2008, Berkshire invested $5 billion in preferred stock in Goldman Sachs to provide it with a source of funding when capital markets had become constrained.
  • Utilizing the techniques learned from Graham, he was successful in identifying undervalued companies and became a millionaire.
  • In 1970, Buffett began writing his now-famous annual letters to shareholders.

Unlike his mentor Benjamin Graham, Buffett wanted to look beyond the numbers and focus on a company’s management team and its product’s competitive advantage in the marketplace when considering an investment. Upon graduation, Graham refused to hire Buffett, even suggesting that he avoid a career on Wall Street. The reason was that Graham himself had been rejected by Wall Street firms, which he believed was because he was Jewish. Thus, Graham made it a policy only to hire Jews for his Wall Street company. After three years Graham had a change of heart and offered Buffett a job in New York. Berkshire Hathaway owns more than 60 companies, including insurer Geico, battery-maker Duracell and restaurant chain Dairy Queen.

“I’m not trying to take anything away from the Magnificent Seven, but it’s not a super-diversified portfolio,” Jim Worden told Insider this week, noting all seven are in tech or have tech-related businesses. Worden is the CIO of The Wealth Consulting Group, which manages over $5 billion in assets. J. Heinz Company (Food) for $28 billion and oil pipeline, Phillips Specialty Products. The insurance businesses lose about $2.5 billion from Hurricane Katrina, but Berkshire records a gain of $5.6 billion.

Occidental Petroleum Corporation (OXY)

For dividend investors that are fans of Warren Buffett’s picks, the highest yielding stocks in Berkshire Hathaway’s portfolio include Verizon (VZ ) , ConocoPhillips (COP ) and Sanofi (SNY ). Below are all of the highest yielding dividend stocks in the Berkshire Hathaway portfolio. For additional high yielding stocks, check out High Dividend Stocks By Yield. Following the management change, Buffett decided to maintain textiles as the company’s core business, but also used the company as an investment vehicle. As plants began to close and the demand for textiles declined, the core business was changed to insurance services in 1967.

Moody’s Corporation (NYSE:MCO)

Berkshire Hathaway’s lifeblood is what industry insiders call a float. This is the money paid to Berkshire Hathaway’s insurance subsidiaries in premiums that has yet to be used to cover claims. Regarding stock performance, Berkshire Hathaway has a legacy of strong returns. Berkshire Hathaway’s Class B (BRK-B) had a 60% five-year return and a 229% 10-year return. Warren Buffett began his career as an investor when he was just 11 years old, and his strategy is marked by equal parts patience and appreciation of the value of long-term investing. Once you have decided which Warren Buffett stocks you want to own, you’ll have to open a brokerage account, fund that account and then put in the purchase order to buy the stock.

Next Up in Investing

He then holds these investments for the long term, some indefinitely, always allowing the power of compounding to work its magic. Over time, it grew into a major business that specializes in supplying products to grocery stores, drug stores, chain restaurants, and convenience stores. Berkshire purchased it from Walmart and currently operates more than 80 distribution centers across the U.S. Warren Buffett began shifting Berkshire Hathaway’s business strategy, laying the foundation for its investment and acquisition operations. By 1985, the year in which Buffett liquidated the company’s textile operations, Berkshire Hathaway had already evolved into a well-established holding company.

Coca-Cola is Berkshire’s oldest equity position—the firm first started buying KO in 1988. Buffett is on the record asserting that he will never sell any of his shares, and Coca-Cola makes up around 7% of Berkshire Hathaway’s portfolio today. Buffett began investing in American Express starting in 1991, buying preferred stock  and those converted to common stock in 1994. Today, AAPL represents the company’s largest equity position, making up more than 41% of its total portfolio.

Berkshire and other investment groups purchase $500 million in Level 3 Communications bonds; a former Omaha fiber network company. Berkshire’s stock rises from $4,800 to $8,000/share, and Buffett’s wealth reaches $3.8 billion. Berkshire begins buying stock in the Washington Post Company (Publishing), becoming a member of the board of directors and close friends with Katharine Graham, the company and its flagship newspaper’s controller. Buffett’s holdings in the Partnership are now worth approximately $6.8 million. Additionally, no money center bank is as interest sensitive as B of A. With interest rates pushing off their Dec. 2008 to Dec. 2015 lows in recent years, it’s allowed Bank of America to generate a hefty amount of net interest income.

He may not always be right, but over the long haul he’s proven quite successful with his long-term approach. The majority of the stocks held by Berkshire Hathaway are well known dividend stocks. While Berkshire Hathaway does not pay dividends to shareholders, a good portion of its profits are from dividend payouts. U.S. Bancorp also avoided the riskier derivative investments that sacked money-center banks during the financial crisis. By sticking to the bread-and-butter of banking (i.e., loan and deposit growth), it’s been able to deliver industry-topping return on assets. When it comes to investing success, Berkshire Hathaway (BRK.A 1.73%) (BRK.B 1.57%) CEO Warren Buffett is in a class of his own.

It’s also the hardest of the three traits to find in the business world, he said. “Every business student you have has the requisite intelligence and requisite energy,” Buffett told a University of Nebraska alumni magazine in 2001. Bank of America has benefited in recent years by notably reducing its operating expenses and closing some of its physical branches. As banking moves online, the company has made efforts to meet younger consumers by pushing mobile banking applications. In March outlets reported that Berkshire Hathaway’s HomeServices of America Inc., the second-largest residential brokerage owner in the U.S., was set to take more steps toward the top spot, held by Realogy’s NRT LLC. Buffett said he “barely noticed” when Berkshire Hathaway originally acquired HomeServices, then part of MidAmerican Energy Holdings Co., back in 2000.

After the morning newspaper Buffalo Courier-Express ceased operation in 1982, the Buffalo Evening News changed its name to The Buffalo News and began to print morning and evening editions. It now prints only a morning edition.[82] In 2006, the company bought Business Wire, a U.S. press release agency. In 2002, Berkshire acquired The Pampered Chef, Ltd., the largest direct seller of kitchen tools in the United States. Products are researched, designed, and tested by The Pampered Chef, and manufactured by third-party suppliers. From its Addison, Illinois, headquarters, The Pampered Chef utilizes a network of more than 65,000 independent sales representatives to sell its products through home-based party demonstrations, principally in the United States. Insurance and reinsurance business activities are conducted through approximately 70 domestic and foreign-based insurance companies.

Apple is the leading smartphone brand in the U.S., is benefiting immensely from the introduction of 5G wireless capability, and is steadily transforming itself into a platforms’ company that’ll be focused on subscription services. This shift, led by CEO Tim Cook, will allow Apple to better weather product replacement cycles, and it should have a positive long-term effect on operating margins and customer loyalty. Interestingly, though, the Oracle of Omaha’s success isn’t the result of diversification. Buffett believes diversification is only a necessity if you don’t know what you’re doing. As of this past weekend, the cumulative value of the nearly four dozen stocks held by Berkshire Hathaway was $329.7 billion.

Share repurchases are also Warren Buffett’s way of rewarding his investors. Since Berkshire Hathaway doesn’t pay a dividend, reducing the company’s outstanding share count over time via buybacks is incrementally increasing the ownership stakes of the company’s longtime shareholders. Progressive doesn’t pay much of a dividend, but if you’re looking for income stocks, several other insurers have a history of annual payout hikes. Property and casualty insurer Cincinnati Financial (CINF 2.96%) pays a dividend that at current share prices yields 2.24%, and has raised that dividend for 62 straight years  — making it a member of the exclusive Dividend Kings club. Meanwhile, Chubb (CB 2.01%) is a member of the still-prestigious  Dividend Aristocrats, after having increased its payout for 29 years straight.

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