If any investor has stood the test of time, it’s 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 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.
One of the reasons for Berkshire Hathaway’s stunning success over the years is that Buffett and his right hand man, Charlie Munger, have always tried to stay with stock ideas they understand, and that has proved to be a winning hand. In addition, many of the companies in their portfolio pay solid and reliable dividends.
We screened the Berkshire Hathaway holdings looking for stocks that total return investors should buy and own. We always like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13% – 10% for the increase in stock price and 3% for the dividends paid.
Seven Warren Buffett stocks fit the bill perfectly, and while all are rated Buy at major Wall Street firms, it’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
American Express
This stock has backed up recently and is offering the best entry point since late last year despite posting very solid second-quarter results. American Express Company (NYSE: AXP) provides charge and credit=payment card products, and travelelated services worldwide.
The company operates through three segments: global consumer services group, global commercial services, and global merchant and network services. 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, mid-sized companies, and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams, and directesponse advertising.
Shareholders are currently paid a 1.35% yield. Wells Fargo has an Overweight rating on the financial giant and a $190 price target. The Wall Street consensus target for the stock is posted at $183.63. The shares closed trading on Friday at $154.02.
Chevron
This integrated energy giant is a safer way for investors looking to get positioned in the energy sector and has backed up nicely. Chevron Corporation (NYSE: CVX) through its subsidiaries, engages in integrated energy and chemicals operations worldwide. The company operates in two segments, upstream and downstream.
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 liquefied natural gas; 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.
24/7 TempoChevron posted massive second-quarter results and remains one of the best ways to play energy safely.
The company has a sizable 3.47% dividend, and has a solid place in the sector when it comes to natural gas, and liquefied natural gas. Credit Suisse has an Outperform rating and a huge $202 target price. The consensus target is posted at $175.70. The shares closed Friday at $163.78, up almost 9%.
The Coca-Cola Company
This company has long been a top Buffet holding as he owns 400 million shares. Coca-Cola not only offers safety, but has an incredibly strong worldwide brand with 40% overseas sales. The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, offering consumers more than 500 sparkling and still brands. Led by Coca-Cola, one of the world’s most valuable and recognizable 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, they are the No. 1 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 imbibe the company’s beverages at a rate of more than 1.9 billion servings a day. It’s also important to remember that the company also owns 16.7% of Monster Beverage (NASDAQ: MNST), which continues to deliver big numbers.
Coca-Cola posted very strong second-quarter results, and gave very positive forward guidance as demand for the company’s products has remained strong despite price increases.
Investors are paid a very dependable 2.74% dividend. Truist Financial has a Buy rating and a $75 target price. The Wall Street consensus price objective for the stock is set at $69.54. The final trade on Thursday came in at $64.17.
Kraft Heinz
Even in bad times, everybody has to eat, and this company always stands to benefit. The Kraft Heinz Company (NYSE: KHC) was formed almost six years ago via the merger of H.J. Heinz Company and Kraft Foods Group. The company is a leading global food company with $25 billion of estimated annual revenues generated by well known brands such as Kraft, Heinz, Oscar Meyer and Maxwell House. The company is the third-largest food and beverage manufacturer in North America and derives 76% of revenues from that market and 24% from international.
The company’s additional 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. Warren Buffett holds a huge position in Berkshire Hathaway of 325 million shares.
24/7 TempoShareholders are paid a very large 4.34% dividend. The BofA Securities team has a Buy rating on and the shares are one of the top dividend picks on the firm’s US1 list. The price target is posted at $48. The Wall Street consensus target price is set lower at $42.97.The shares closed Friday at $36.83.
Kroger
This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less. The Kroger Company (NYSE: KR) operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price-impact warehouses.
Its combination of food and drug stores offers natural-food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.
Kroger’s marketplace stores feature full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys; and price-impact warehouse stores provide grocery, and health and beauty care items, as well as meat, dairy, baked goods, and fresh produce items. It also makes and processes food products for sale in its supermarkets and online; and sells fuel through 1,613 fuel centers. As of Jan. 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.
The company recently posted strong second-quarter earnings results and management rewarded investors by raising the dividend a stunning 24%. Investors who purchase shares prior to the ex dividend date of Aug. 12 will receive the higher dividend on Sept. 1.
Kroger shareholders are paid a 2.24% dividend. BofA Securities has a Buy rating on the shares and a $75 target price. The consensus target across Wall Street is posted at a much lower $54.92. The last trade on Friday was reported at $46.44.
Merck
This company remains a leading healthcare stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) operates as a healthcare company worldwide through two segments, pharmaceutical and animal health.
The pharmaceutical area offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes. Merck has vaccine products, such as preventive pediatric, adolescent, and adult vaccines.
The animal health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products.
Merck serves drug wholesalers and retailers, hospitals, and government agencies; managed healthcare providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions; and physicians and physician distributors, veterinarians, and animal producers. The company has collaborations with AstraZeneca PLC; Bayer AG; Eisai Co., Ltd.; Ridgeback Biotherapeutics; and Gilead Sciences, Inc. to jointly develop and commercialize long-acting treatments in HIV.
Investors are paid a solid 3.09% dividend. Goldman Sachs has a $105 target price and the stock is on the firm’s Conviction List of top stock picks. Merck has a consensus target across Wall Street of $96.54, which compares with Friday’s closing print of $89.34.
Verizon Communications
This is a top telecommunications company that offers tremendous value at current levels. Berkshire Hathaway owns a stunning 158.8 million shares. Verizon Communications, Inc (NYSE: VZ) is one of the largest US telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
The company’s wireless network serves about 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline because of wireless substitution and cable competition. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers worldwide.
Verizon posted disappointing second-quarter results and the stock was hammered. Patient investors can buy shares now, and collect the massive dividend while management sorts out the current issues.
Verizon investors are paid an outstanding 5.54% dividend. Cowen has an Outperform has a Buy rating to go with a $64 target price. The consensus price target across Wall Street is set at $60.64. Verizon closed Friday’s trading session at $53.73.
Given Warren Buffett’s proclivity for only owning the stocks of companies that he understands inside and out, all of these all make sense now for growth and income investors worried about the potential for a continued steep market decline. While they could sell off in a large correction, they will hold up far better than most, and are less likely to be stung by higher interest rates.
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