If you’re looking for investment ideas, what better place to start than with Warren Buffett, one of the most famous investors of modern times? Also called the Oracle of Omaha for his investment success over time, the CEO of Berkshire Hathaway currently has investments in Chevron(NYSE: CVX), Visa(NYSE:V)And Coca-cola(NYSE: KO). All three are worth watching in December.
Chevron is an integrated energy giant with operations across the sector, from upstream (energy production), through midstream (pipelines) to downstream (chemicals and refining). This diversification helps smooth out the peaks and valleys inherent in this highly volatile, commodity-driven sector.
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Furthermore, Chevron has long focused on a rock-solid balance sheet, with a current debt-to-equity ratio of approximately 0.17 times. That’s one of the lowest levels of leverage among the company’s closest peer group.
Simply put: Chevron is ready for the next oil downturn. When the time comes, the company will take on debt and lean on its balance sheet so it can continue to finance its operations while supporting its dividend. As the energy sector recovers, debt burden will decrease.
That’s the game plan management has had for years and how the company has amassed three decades of annual dividend increases despite operating in a highly volatile industry. With an attractive dividend yield of around 4% today, Chevron is a great asset for dividend investors looking to add some energy exposure to their portfolio.
Visa is one of the largest payment processing companies in the world. The country has long benefited from the transition from cash to card-based payments. Contributing to this is the increase in online shopping, where cash is not even an option.
Although Visa only charges a small fee for each transaction, it processed more than 233.8 billion transactions in fiscal year 2024. These small fees add up to big numbers, and they’re still growing, with transactions processed increasing 10% year-over-year in fiscal 2024. It seems very likely that the upward trend will continue.
What’s interesting is that Wall Street has pushed Visa’s stock price to record highs. But at the same time, the price-to-sales ratio and the price-to-earnings ratio are both close to their five-year averages.
The dividend yield is small at 0.75%, but historically quite attractive for Visa. In other words, this well-positioned growth stock appears reasonably priced. That’s worth your attention right now if you’re focused on growth, noting that Buffett’s approach is essentially paying a fair price for great companies.
Coca-Cola probably doesn’t need much introduction, as its name is one of the most well-known in the world. It is a beverage giant with a portfolio of dominant brands, a far-reaching distribution system, a powerful marketing team, innovation power and the size and financial resources to acquire smaller competitors (when this will contribute to growth).
That is a combination of features that few competitors possess. And it’s the driving force behind more than 50 years of annual dividend increases, putting Coca-Cola on the very elite Dividend Kings list.
It has been a long-time holding of Warren Buffett and often commands a premium price on Wall Street. But what’s interesting right now is that Coca-Cola’s share price has fallen to the point where its price-to-sales and price-to-earnings ratios are roughly in line with their five-year averages. That suggests the stock is fairly priced, just like Visa.
Add to that the incredible dividend history and a 3% dividend yield – more than double what the S&P 500 index offers – and it looks like Coca-Cola is worth adding to your portfolio today if you’re an income investor.
Chevron, Visa and Coca-Cola all look like attractive stocks right now. But it’s important to remember that Buffett is not a stock trader, but a long-term investor. He typically buys and holds companies, allowing the business growth of his investments to benefit him financially over time.
If you’re looking at these three stocks, go in expecting to follow its buy-and-hold lead. If you do, you’ll likely be pleased with the outcome of this trio of iconic companies.
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We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns December 2, 2024
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Berkshire Hathaway, Chevron and Visa. The Motley Fool has a disclosure policy.
3 Warren Buffett Stocks to Buy Hand Over Fist in December was originally published by The Motley Fool
