If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally thousands of loyal fans who are investors. Known for his long buy-and-hold strategies and his massive portfolio of public and private holdings, Buffett remains one of the preeminent investors in the entire world.
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This weekend marked the annual pilgrimage to Omaha, Nebraska, for the Berkshire Hathaway shareholders 2023 extravaganza, and it was very clear from Buffett and his vice chair, Charlie Munger, that they feel the “easy money” times are over and most of the businesses in the portfolio, whether public or private, are likely to report lower earnings this year.

Higher interest rates and worries over the banking system, which Buffett puts at the feet of very bad corporate management at the banks that failed, have investors nervous, and with good reason. Long-time investors and Buffett mavens are familiar with his quote that “His favorite holding for an S&P 500 stock is forever.” So, we screened Berkshire Hathaway for long-term holdings that are safe and will continue to pay big dividends.

Buffett has stayed positive on dividend stocks and Treasury bills and notes, and it was estimated that those stocks and bonds will generate $5 billion in income for the fund, versus $50 million just a few years ago. All five of these top stocks are rated Buy, and the companies all pay reliable dividends. However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Chevron

This integrated giant is a safer way for investors looking to get positioned in the energy sector, and the shares have backed up nicely this year. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide. The company operates in two segments.

The Upstream segment is involved in the 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; and transportation, storage and marketing of natural gas. It also operates a gas-to-liquids plant.

The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in the cash management and debt financing activities; insurance operations, real estate activities and technology businesses.
Chevron posted stellar first-quarter results and remains one of the best ways to play energy safely.

The company pays a 3.77% dividend. Raymond James has a $208 target price on Chevron stock. The consensus target is $191.96, and shares closed on Friday at $160.21 apiece.
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Citigroup

This top bank stock has rallied nicely off the lows, and Buffett bought $2.5 billion worth of the shares last summer. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations and governments a broad range of financial products and services.

The company offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. And it operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.

Trading at a still cheap 8.98 times estimated 2023 earnings, this pick looks quite reasonable in what remains a volatile stock market, as well as in a sector that has dramatically lagged recently. Plus, like the other big money-center banks, Citigroup is in much better shape than during the financial crisis of 2008.

Citigroup stock investors receive a 4.40% dividend. The $78 Oppenheimer price target is a Wall Street high. The consensus target is $58.04, and shares closed at $46.32 on Friday.

Coca-Cola

This top Buffet holding also offers safety. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.

The company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Shareholders receive a 2.87% dividend. Citigroup’s target price is $74, and Coca-Cola stock has a consensus target of $69.88. Friday’s final trade was for $64.02 a share.

Even in bad times, everybody has to eat, and Kraft Heinz Co. (NASDAQ: KHC) always stands to benefit. The company was formed almost six years ago in the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion in annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House.
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The company is the third largest food and beverage manufacturer in North America and derives 76% of revenues from that market and 24% from overseas. The company’s other brands include ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

The dividend yield here is 3.87%. BofA Securities has set its price target at $50. The consensus target is $45.11. And Kraft Heinz stock closed on Friday at $41.32.

Procter & Gamble

The company offers a very solid dividend and a host of recognizable products. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products firms and one of the oldest companies in the Fortune 500. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn.

The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores and pharmacies. The company has been very innovative in its product development process and uses that to help ensure future growth and cash flow. This should provide investors with years of steady growth and dividends.

Procter & Gamble stock comes with a 2.41% dividend. UBS has a price objective of $180, while the consensus target is $164.77. The shares were last seen on Friday trading at $156.03.

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These five top stocks owned by Warren Buffett’s Berkshire Hathaway should do very well as rates continue higher and may be poised to stay at 16-year highs well into 2024. Given the inversion between the two-year note and the benchmark 10-year government paper, it is a good bet that a recession is headed our way in the second half of 2023, so it makes sense to own stocks that will benefit from the surge higher.

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