Buffett’s Top Picks for August: 2 High-Yield Stocks to Buy Now
Warren Buffett’s Top Picks for Investors
Warren Buffett is widely regarded as one of the most successful investors in history, with a reputation for making shrewd and informed decisions about which companies to invest in. As the CEO of Berkshire Hathaway, he uses this investment vehicle to buy publicly traded stocks and even entire companies. In this article, we’ll take a closer look at two high-yield investment ideas from Buffett’s portfolio that investors may want to consider adding to their portfolios.
Chevron: A Well-Run Energy Company with a Bright Future
One of the publicly traded stocks that Buffett owns is Chevron (NYSE: CVX), a large integrated energy company. This means that Chevron has exposure to the entire energy value chain, from production through pipelines and on to chemicals and refining. This diversification helps to smooth out the inherent ups and downs of the commodity-driven energy sector.
Chevron’s globally diversified portfolio allows it to focus its investments and efforts in areas that offer the highest returns. The company is well-run, with a strong track record of delivering results. However, it has faced some headwinds over the past few years, including a stalled acquisition and difficulties in Venezuela. These issues have held back growth and caused Chevron’s dividend yield to be higher than that of its closest peer, ExxonMobil (NYSE: XOM).
However, with the path cleared for improved performance, Chevron looks like an attractive energy choice. Its 4.3% yield is still higher than Exxon’s 3.5% yield, making it a compelling option for investors who prefer dividend stocks. Moreover, Chevron has increased its dividend every year for 38 consecutive years.
Enterprise Products Partners: A Midstream Giant with a Strong Yield
Buffett doesn’t just buy public companies; he also buys entire companies. One area where he’s invested heavily is the midstream business. This makes sense for Buffett, given the reliable cash flows that pipeline operators generate from fees collected from customers. Customers pay to use the energy infrastructure owned by midstream companies, and demand for transportation services is more important than commodity prices.
You can’t invest directly in the midstream business within Berkshire Hathaway, but you can buy a North American midstream giant like Enterprise Products Partners (NYSE: EPD). The master limited partnership’s (MLP’s) 6.9% distribution yield is one of its most attractive features. Not only has this yield been increased annually for 26 consecutive years, but the company also sports an investment-grade rated balance sheet and distributable cash flow that covers distributions by a strong 1.7x.
Additionally, Enterprise has $5.6 billion worth of capital investments in the works to keep the top and bottom lines growing. This level of commitment to growth and stability makes it a highly reliable income stock for investors who want to invest "like" Buffett.
Long-Term Investing: The Key to Success
Buffett buys stocks with the intention of holding them for the long term, allowing him to benefit from the growth of the businesses he owns. If you buy Chevron or Enterprise, don’t think about these investments as short-term plays. Instead, consider them core long-term holdings that will reward you well over time.
Conclusion
In conclusion, investors who want to follow in Warren Buffett’s footsteps may want to consider adding Chevron and Enterprise Products Partners to their portfolios. Both of these companies have strong track records and attractive dividend yields, making them compelling options for investors who prefer dividend stocks. By taking a long-term approach to investing, as Buffett does, you can benefit from the growth of these businesses over time.
The Importance of Long-Term Investing
Investing in Chevron or Enterprise may not be a guarantee of success, but it’s clear that these companies have strong potential for growth and stability. As Warren Buffett has demonstrated, long-term investing is key to success. By taking a patient approach and letting your investments grow over time, you can benefit from the power of compounding returns.
The Benefits of Investing in Chevron
Chevron’s globally diversified portfolio allows it to focus its investments and efforts in areas that offer the highest returns. The company has increased its dividend every year for 38 consecutive years, making it a reliable option for investors who prefer dividend stocks. Additionally, Chevron’s 4.3% yield is still higher than Exxon’s 3.5% yield.
The Benefits of Investing in Enterprise Products Partners
Enterprise Products Partners is an industry-leading player and a highly reliable income stock that allows you to invest "like" Buffett, even if you can’t perfectly mimic his investment decisions. The company has a strong balance sheet and distributable cash flow that covers distributions by a strong 1.7x.
The master limited partnership’s (MLP’s) 6.9% distribution yield is one of its most attractive features, and the company also sports an investment-grade rated balance sheet. Enterprise has $5.6 billion worth of capital investments in the works to keep the top and bottom lines growing.
Investing Like Warren Buffett
If you’re looking for a reliable income stock that allows you to invest "like" Buffett, consider adding Chevron or Enterprise Products Partners to your portfolio. These companies have strong track records and attractive dividend yields, making them compelling options for investors who prefer dividend stocks.
