For more than 50 years, Warren Buffet, CEO of Berkshire Hathaway, has been known as a Wall Street wizard.
Market analysts credit his remarkable ability to conquer the financial world to several underlying factors, such as his desire to buy into businesses having well-defined competitive advantages and strong management teams, investing in stocks capable of producing long-term growth, and possessing significant amounts of cash needed to survive market downturns.
Currently, the legendary financial holding company and its leader boast a stock portfolio of 44 different corporate entities.
Believe it or not, however, the “Oracle of Omaha,” as he is affectionately known in the financial world, has only invested in three stocks continuously since 2000. They are:
Coca-Cola
Coca-Cola reigns supreme among stocks Buffett puts faith in. His company has invested in the beverage giant since 1988.
Companies like Coca-Cola provide a basic necessity or good to the public. Consumers will always need beverages like Coke regardless of the economy’s current performance, leading to a consistent cash flow for investors.
Additionally, the company operates throughout the world, increasing its steady stream of cash influx. Moreover, the company is an established international brand name earning millions from marketing efforts. To top it off, Coca-Cola targets younger people, which ensures significantly steady revenue for prolonged timeframes.
Berkshire Hathaway’s estimated dividend income from Coca-Cola equals $776 million.
American Express
American Express provides another staple in Buffett’s arsenal. Berkshire Hathaway has invested in the credit card company extraordinaire since 1991.
Buffett respects the job done by the solid management team rendering sound financial decisions. Furthermore, the company earns investors money in dual ways.
It lands in the top three of credit card purchase volume in the United States, enabling the company to generate fee revenue from merchants accepting its card charges. However, because American Express also extends credit to cardholders, it generates major money from annual fees and interest.
Additionally, the company attracts a significant number of high-income cardholders. Said subjects often prove less likely to alter their spending habits during times of economic tumult.
Moody’s
Berkshire Hathaway has held stock in the credit-rating agency since its public debut on September 30, 2000.
The company has always been a solid economic investment because of at least one of its two core principles leading to optimal performance at a given time.
Moody’s enjoys a favorable reputation for its Investors Services segment, providing credit ratings for corporate and governmental entities. A decade-plus of historically low lending rates inspired companies and government agencies to issue debt.
However, in March of 2022, the Federal Reserve engaged in an aggressive rate-hiking policy. In turn, interest rates climbed and fewer entities wanted to raise capital via debt insurance.
The need to rate corporate debt declined and growth potential shifted to Moody’s Analytics.
The company’s analytics performs several crucial financial functions such as executing risk management, performing economic assessments, and offering compliance solutions. These tasks may help predict events like economic downshifts, making the company performing said duties quite valuable to smart investors.
