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- The stock market is up a stunning 34% year over year.
- Investors’ caution is probably a smart move now.
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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, and his annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors.
Known for his long buy-and-hold strategies and massive portfolio of public and private holdings, he remains one of the world’s preeminent investors. With interest rates poised to move lower over the next 18 months, adding Buffett dividend-paying stocks that will rally as bond yields drop makes sense.
With his stunning $280 billion in cash, many on Wall Street wonder what company or companies Buffett plans to target next. Some have floated the idea that he is apprehensive and is anticipating a steep market sell-off. In other times of market distress, like the great financial crisis of 2007-2008, Buffett dove in and scooped up stocks and preferred stock from troubled companies.
Given that the huge market has moved higher over the past year, it is wise for investors to take profits on high flyers and invest that capital into high-yield dividend-paying stocks that will move higher as interest rates move lower. We screened the Berkshire Hathaway portfolio for the highest-yielding stocks, and five companies look like great ideas in November. All are rated Buy at top Wall Street firms.
Why do we cover Warren Buffett stocks?
There are few investors with the results and the reputation Buffett has garnered over the past 50 years, and while investing has changed over the previous half-century, buying good companies with products and services that are known worldwide while paying dividends will always stay in style.
Chevron
This integrated giant is a safer way for investors looking to position themselves in the energy sector. It pays a rich 4.60% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. It operates in two segments.
The Upstream segment is involved in the following:
- 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
- Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum product
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
Chevron announced a year ago that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.
Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’ Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal will ultimately be completed, and Chevron will emerge even more powerful in the energy sector.
Wells Fargo has an Overweight rating with a $169 target price objective.
Citigroup
This is a top money center bank, and Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.48% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.
Citigroup offers:
- Consumer banking and credit
- Corporate and investment banking
- Securities brokerage
- Transaction services
- Wealth management services
Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).
Trading at a reasonable 9.2 times estimated 2025 earnings, this company looks very sensible in a volatile stock market and in a sector that has lagged some in 2024 but looks to be gaining ground.
Goldman Sachs has a Buy rating and a $75 target price for the shares.
Coca-Cola
This company remains a top Buffett holding as he owns a massive 400 million shares, 9.3% of the float and 9.1% of the portfolio. Coca-Cola Co. (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
- Del Valle
Globally, they are the top provider of sparkling beverages, ready-to-drink coffees, and juice drinks.
Through the world’s most extensive beverage distribution system, consumers in more than 200 countries enjoy 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 owns almost 20% of Monster Beverage (NASDAQ: MNST), which continues to deliver big numbers.
Investors are paid a very dependable 2.75% dividend.
HSBC has a Buy rating on the shares and recently lifted their target price to $85 from $74.
Kraft Heinz
Even in bad times, everybody has to eat, and this company always stands to benefit while paying a tremendous 4.60% dividend. Kraft Heinz Co. (NYSE: KHC) was formed via the merger of H.J. Heinz Company and Kraft Foods Group.
The company is a leading global food company with estimated annual revenues of $25 billion from well-known brands such as Kraft, Heinz, Oscar Meyer, and Maxwell House.
Kraft Heinz is North America’s third-largest food and beverage manufacturer. It derives 76% of its 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
- Velveeta
BofA Securities has a Buy rating on the shares with a $70 target price.
Kroger
This grocery chain giant is always a solid and conservative idea that pays a 2.35% dividend. Kroger Co. (NYSE: KR) is a retailer in the United States. It 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
Multi-department stores offer:
- Apparel
- Home Fashion and furnishings
- Outdoor living
- Electronics
- Automotive products
- Toys
The company’s marketplace stores offer:
- Full-service grocery, pharmacy, health and beauty care
- Perishable goods, as well as general merchandise, including apparel, home goods, and toys
- Price-impact warehouse stores sell groceries, health and beauty care products, meat, dairy, baked goods, and fresh produce
The company also manufactures and processes food products in its supermarkets and online; it sells fuel through 1,613 fuel centers.
Kroger owns 22 companies, including Harris Teeter, Smith’s Food and Drug, Ralphs, King Soopers/City Market, and Roundy’s Supermarkets, and is in the process of buying Albertsons Companies Inc. (NYSE: ACI). It has been reported the company sells more than 579 stores and other assets for about $1.9 billion.
This is to clear a path for a merger with antitrust regulators reviewing a deal that would merge two of the nation’s largest grocery chains. Negotiations with the Federal Trade Commission have proven difficult, and the two companies have been in federal court to defend the merger.
BofA Securities has a Buy rating for the company with a $70 target price objective.
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