Warren Buffett's Top 5 Stock Holdings

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 |  Includes: AXP, IBM, KO, PG, WFC
by: Dividendinvestr

Warren Buffett is one of the greatest investors of all time. He has been holding on to his positions for years, if not decades, to minimize taxes. We recommend investors follow a similar strategy in order to protect their investments and grow their portfolio at modest rates. This is a better alternative to investing in long-term government bonds, which yield around 2%.

Warren Buffett's Berkshire Hathaway had 35 securities with a total value of $75.3 billion in its 13F portfolio as of March 31, 2012. Buffett's top five holdings constitute 74% of his 13F portfolio. We believe that his top five holdings trade at fair values with their current fundamentals. These five stocks present long-term investment opportunities for both conservative and income investors. All of them have long-term competitive advantage and their EPS are expected to grow by over 7% over the next five years. All have P/E ratios of lower than 20 and profit margin of higher than 10%, which make them very attractive. We obtained market data from Finviz and Morningstar.

Stock

Market Cap
(Billion $)

Sector

Dividend Yield

P/E

Operating Margin

% Port
in 13F Portfolio

Coca-Cola (NYSE:KO)

169.9

Consumer Goods

2.7%

20.0

22.2%

19.7%

Wells Fargo (NYSE:WFC)

169.3

Financial

2.8%

11.0

30.3%

17.9%

International Business Machines (NYSE:IBM)

224.1

Technology

1.8%

14.5

19.7%

17.8%

American Express (NYSE:AXP)

64.2

Financial

1.4%

13.4

21.3%

11.6%

Procter & Gamble (NYSE:PG)

171.2

Consumer Goods

3.6%

19.5

16.0%

6.5%

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Warren Buffett's four long-term top holdings (including KO, WFC, AXP and PG) returned 18% during the last five years. The average relative performance of these stocks against the S&P 500 is 23.7%.

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Shares of Coca-Cola recently traded at $75.23 with a trailing price to earnings of 19.95 and a forward price to earnings of 16.76. KO has a 2.71% dividend yield and gained 16.06% during the past 12 months. The stock has a market cap of $169.9 billion and total debt/equity ratio of 0.95. KO has an estimated growth rate of 9.51% for this year and 7.98% for next five years. Buffett had $14.8 billion invested in KO shares.

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Shares of Wells Fargo recently traded at $31.86 with a trailing price to earnings of 10.95 and a forward price to earnings of 8.66. WFC has a 2.76% dividend yield and gained 17.35% during the past 12 months. The stock has a market cap of $169.3 billion and total debt/equity ratio of 1.24. WFC has an estimated growth rate of 12.2% for this year and 10.48% for next five years. Buffett had $13.5 billion invested in WFC shares.

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Shares of IBM recently traded at $194.3 with a trailing price to earnings of 14.49 and a forward price to earnings of 11.72. IBM has a 1.75% dividend yield and gained 18.14% during the past 12 months. The stock has a market cap of $224.1 billion and total debt/equity ratio of 1.55. IBM has an estimated growth rate of 10.17% for this year and 10.49% for next five years. Buffett had $13.4 billion invested in IBM shares.

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Shares of American Express recently traded at $55.81 with a trailing price to earnings of 13.35 and a forward price to earnings of 11.65. AXP has a 1.43% dividend yield and gained 11.78% during the past 12 months. The stock has a market cap of $64.2 billion and total debt/equity ratio of 3.04. AXP has an estimated growth rate of 10.88% for this year and 10.97% for next five years. Buffett had $8.8 billion invested in AXP shares.

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Shares of Procter & Gamble recently traded at $62.49 with a trailing price to earnings of 19.47 and a forward price to earnings of 14.91. PG has a 3.6% dividend yield and lost 2.45% during the past 12 months. The stock has a market cap of $171.2 billion and total debt/equity ratio of 0.51. PG has an estimated growth rate of 8.55% for this year and 7.84% for next five years. Buffett had $4.9 billion invested in PG shares.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.