Warren Buffett is a legendary value investor who has made a fortune by buying undervalued stocks and then patiently letting the market recognize the true value over time. As CEO of Berkshire Hathaway, Inc. (NYSE:BRK.A), Buffett has been able to make investments that have made him one of the world's richest men. He has also made huge fortunes for some of his shareholders.
It makes sense to follow what stocks Warren Buffett has major holdings in, since he has a time-tested and unique ability to buy stocks that usually pay off. Some might think it would be necessary to trade daily, get very lucky or buy high-risk stocks in order amass the returns needed to become so wealthy; however, most of the Buffett investments are in well-known stocks that are held for a very long time.
If you study Mr. Buffett's investment strategy, you will see he likes to buy businesses he understands, and keeps it simple when it comes to investing. The stocks below are some of Berkshire Hathaway's highest-yielding stocks, and the size, valuation and stability of these companies make it possible for investors to have peace of mind and income in a very volatile market. Since Warren Buffett loves stocks when they are cheap, it makes sense to wait for dips before buying these names. Here's a list of the latest holdings.
Here's a closer look at 5 dividend stocks that Warren Buffett's Berkshire Hathaway has major investments in. (The stocks are ranked in descending order, according to yield):
ConocoPhillips (NYSE:COP) is a major integrated oil and gas company. Conoco explores, produces, refines, and transports oil, natural gas, and other fuels. This company has extensive oil and gas reserves which will increase in value as energy prices rise. Many investors like investing in oil companies because of the inherent inflation protection one gets from hard assets like oil. Conoco has significant refining operations and refinery margins have been weak. This could lead to weaker than expected earnings, so it makes sense to buy on dips only.
Here are some key points for COP:
- Current share price: $73.28
- The 52 week range is $58.65 to $81.80
- Earnings estimates for 2011: $8.70 per share
- Earnings estimates for 2012: $8.45 per share
- Annual dividend: $2.64 per share which yields 3.6%
Johnson & Johnson (NYSE:JNJ) manufactures and markets a wide variety of health care and medical products. Johnson & Johnson owns many major brands, such as Listerine, Motrin, Band-Aid, Reach, Splenda, Tylenol, Lubriderm, Sudafed and others. This stock has not been a top performer in the past year, due to product recalls and other issues. However, with a solid dividend yield and a very reasonable price to earnings ratio of just about 13 times, it's easy to see why Mr. Buffett has made JNJ a top holding. Recently, it has been possible to buy this stock for about $63.50. It makes sense to buy on dips to that level.
Here are some key points for JNJ:
- Current share price: $65.20
- The 52 week range is $57.50 to $68.05
- Earnings estimates for 2011: $4.97
- Earnings estimates for 2012: $5.23
- Annual dividend: $2.28 per share which yields 3.5%
Intel Corporation (NASDAQ:INTC) designs and manufactures chips used in notebooks, netbooks, desktops, mobile phones, consumer electronics devices, etc. Intel has a solid balance sheet and offers one of the highest dividends in the tech sector. Smaller companies have been taking some market share from Intel, but this stock remains a core holding for many tech and dividend investors. According to recent filings, Berkshire Hathaway started a relatively new position of about 9.3 million shares in Intel.
A number of major tech companies (including Intel) have recently warned that the massive floods in Thailand have disrupted the PC supply chain. When Intel first warned about this issue, the stock dropped to about $23, but has since rebounded. Look for another drop to about $23 before buying, as guidance might also be weak when earnings are reported.
Here are some key points for INTC:
- Current share price: $25.59
- The 52 week range is $19.16 to $25.78
- Earnings estimates for 2011: $2.37 per share
- Earnings estimates for 2012: $2.38 per share
- Annual dividend: 84 cents per share which yields 3.3%
General Dynamics (NYSE:GD) is a leading defense contractor. This company designs and manufactures combat vehicles, weapons systems, munitions, ships, and Gulfstream jets. This company is more diversified compared to some defense contractors, thanks to the Gulfstream division. General Dynamics shares dropped to about $55 in October over concerns that defense spending would be severely impacted by budget cuts. The defense budget is almost certainly going to be cut in the future, but buying this stock on dips below $64 is likely to pay off for long-term investors.
Here are some key points for GD:
- Current share price: $69.93
- The 52 week range is $57.39 to $78.27
- Earnings estimates for 2011: $7.23 per share
- Earnings estimates for 2012: $7.58 per share
- Annual dividend: $1.88 per share which yields 3.1%
The Coca-Cola Company (NYSE:KO) is the maker of the world-famous drink, but this company also owns many other well known brands, such as Sprite, VitaminWater, Minute Maid juices, Dasani water, and more. This company is diversified with many types of beverages ranging from soft drinks to juice to water. The company has a massive global distribution network, which allows it to launch new products with ease. Coca-Cola has major growth potential in emerging market countries as incomes rise and consumption of premium beverages increases. In early December, the stock was trading around $64.50, but it has surged recently. It makes sense to be a patient buyer on dips, and hold this stock for the long-term.
Here are some key points for KO:
- Current share price: $69.34
- The 52 week range is $61.29 to $71.77
- Earnings estimates for 2011: $3.83 per share
- Earnings estimates for 2012: $4.14 per share
- Annual dividend: $1.88 per share which yields 2.7%
Data is sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.