The stock market bounced back some on Wednesday, after the worst day since June of 2020, when the COVID-19 pandemic was in full effect. Yet, there are some very ominous clouds on the investing horizon as we approach fall. The only metric that kept the inflation numbers from being worse than they were is that gasoline prices have dropped dramatically over the summer. Some of the top firms and investors on Wall Street still see some imminent danger in the coming months.
Bond guru Jeff Gundlach said recently he thinks the stock market could drop 20% to 25%, a fall that would leave the S&P 500 at around the 3,000 level (it is currently 3,946). High-profile investor Scott Minerd said last week that he expects stocks to fall another 20% by mid-October. Michael Burry of “Big Short” fame is also quite negative and has sold all the equity positions in his hedge fund. Morgan Stanley’s Mike Wilson noted that the market could have 17% to 27% downside risk.
One investor who always is long term with his stock positions is Warren Buffett. One reason for Berkshire Hathaway’s stunning success over the years is that Buffett and his colleague Charlie Munger always have tried to stay with stock ideas they understand. That has proven to be a winning hand. In addition, many of the companies in their portfolio pay solid and reliable dividends.
Longtime investors and Buffett mavens are familiar with his quote that his “favorite holding for an S&P 500 stock is forever.” So, it is not really surprising to report that for all of the success and stature of Berkshire Hathaway, most of its holdings are reasonably safe and many pay dividends. We screened the portfolio looking for safe ideas that make sense now in these volatile times. Seven top stocks stood out, as they are rated Buy and pay very dependable dividends.
With that noted, it is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
Chevron
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.
Chevron’s Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating 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 cash management and debt financing activities, insurance operations, real estate activities and technology businesses.
The company sports a 3.56% dividend. Credit Suisse has a $202 target price on Chevron stock, while the consensus target is $181.52. The shares closed on Wednesday at $163.27.
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