Warren Buffett, the renowned investor, has been an advocate for passive investing in large-cap stocks for an extended period. Emphasizing the significance of stable, dividend-yielding stocks, which he regards as the secret to Berkshire Hathaway Inc.’s triumph, almost 75% of Buffett’s extensive portfolio is concentrated in just five stocks. Let’s delve into these holdings.
Embracing a philosophy that discourages flashy investment activities, Buffett, an advocate of dividend-yielding stocks, attributes them as the secret to Berkshire Hathaway Inc.’s prosperity.
Apple Inc. (AAPL)
Buffett has maintained steadfast support for Apple, labeling it a “better business than any we own.” Approximately 50.04% of his portfolio is allocated to Apple, with a valuation exceeding $155 billion as of September 30. Despite market uncertainties, Apple has demonstrated robust product demand, particularly with record-high iPhone sales in the fiscal fourth quarter. With a year-to-date rise of 49%, Apple stands out as one of the top-performing tech stocks this year.
Despite market uncertainties, Apple’s product demand remains robust, particularly evidenced by record-high iPhone sales in the fiscal fourth quarter ending Sept. 30. The stock has surged by 49% year-to-date, making it one of the standout performers in the tech sector this year.
Analysts are optimistic, with Wedbush and Morgan Stanley providing Overweight ratings, projecting potential upsides of nearly 30% and over 13%, respectively.
Wedbush maintains an Overweight rating on Apple stock with a $250 price target, indicating a potential upside of nearly 30%. Similarly, Morgan Stanley holds an Overweight rating with a $220 price target, projecting a potential upside of over 13%.
Coca-Cola Co. (KO)
Buffett’s investment in Coca-Cola has been highly lucrative, generating approximately $704 million in dividends. His initial investment of $1.3 billion has multiplied to $25 billion. Berkshire Hathaway owns 400 million shares of Coca-Cola, constituting 7.15% of Buffett’s overall portfolio. Coca-Cola, a Dividend Aristocrat, pays $1.84 annually in dividends, yielding nearly 3.2%. The company is expected to sustain stable growth, with a projected 4.1% rise in revenue for the quarter ending December.
Berkshire Hathaway owns 400 million shares of Coca-Cola, constituting 7.15% of Buffett’s overall portfolio. Coca-Cola, recognized as a Dividend Aristocrat, pays $1.84 in dividends annually, yielding nearly 3.2% on the current stock price. The company, despite market volatility, is expected to sustain stable growth, with a projected 4.1% rise in revenue for the quarter ending December.
Bank of America Corp. (BAC)
With around 1.03 billion shares, Bank of America comprises over 9% of Buffett’s portfolio. The bank has benefited from elevated interest rates, witnessing a 10% YoY increase in total net income to $7.8 billion in the fiscal third quarter. Bank of America also raised its dividend by 9% in July, yielding 2.89% on the current price. Analysts at Odeon Capital Group upgraded their outlook on Bank of America from Hold to Buy with a price target of $37.94, indicating a potential upside of over 13%.
Bank of America raised its dividend payouts by 9% in July, totaling $0.96 annually and yielding 2.89% on the current price. Odeon Capital Group upgraded its outlook on Bank of America stock from Hold to Buy on Dec. 13, setting a price target of $37.94, reflecting a potential upside of over 13%.
American Express Co. (AXP)
American Express is Buffett’s third-largest holding, accounting for 7.22% of Berkshire Hathaway’s stock holdings. In the fiscal third quarter, the company reported a record revenue for the sixth consecutive quarter, with a 13% YoY increase. Spending by millennial and Gen Z customers rose by 18%. The consensus revenue estimate for the quarter ending in December indicates a 13% YoY increase.
American Express reported record third-quarter revenue, up 13% from the same period last year, marking the sixth consecutive quarter of growth. The EPS surged by 34% year-over-year to $3.30 for the third quarter. The consensus revenue estimate of $16.01 billion for the quarter ending in December indicates a 13% year-over-year increase. Wall Street anticipates American Express EPS to reach $2.65 for the quarter, reflecting a 13% year-over-year increase.
Buffett’s strategic focus on these four stocks reflects his adherence to stable, dividend-yielding investments, aligning with his long-standing investment philosophy.