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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With the Federal Reserve pausing the rate hike cycle that started over a year ago but promising at least two more increases in the federal funds rate, the prospects for a recession remain front and center. With both the Nasdaq and the S&P 500 recently hitting 52-week highs, it makes sense for investors to book profits and shift capital to safer ideas.
We screened the Berkshire Hathaway portfolio looking for safe stocks that pay dependable dividends and are also rated Buy across Wall Street. We found five companies that look like good ideas for conservative investors worried about a continuation of the bear market and the potential for a recession. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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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 | C Price Prediction) 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 7.0 times estimated 2023 earnings, Citigroup looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.
Investors receive a 4.23% dividend. Oppenheimer’s $78 price target for Citigroup stock is a Wall Street high. The consensus target of $57.31 is closer to Thursday’s close at $48.56 a share.
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Diageo
This is one of the largest producers of alcoholic beverages in the world. Diageo PLC (NYSE: DEO) produces, markets and sells alcoholic beverages worldwide, including scotch whiskey, gin, vodka, rum, beer, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça and brandy, as well as adult beverages and ready to drink products. The company’s premium brands include Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness.
Diageo’s reserve brands include Johnnie Walker Blue Label, Johnnie Walker Green Label, Johnnie Walker Gold Label 18-year-old, Johnnie Walker Gold Label Reserve, Johnnie Walker Platinum Label 18-year-old, John Walker & Sons Collection, Johnnie Walker The Gold Route, Johnnie Walker The Royal Route and other Johnnie Walker super-premium brands, as well as The Singleton, Cardhu, Talisker, Lagavulin and other malt brands.
Shareholders receive a 2.11% dividend. The BofA Securities price target is $189, and Diageo stock has a consensus target of $196.17. The closing share price on Thursday was $173.90.
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Kraft Heinz
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 $25 billion in annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House.
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.
Kraft Heinz stock comes with a 4.36% dividend. BofA Securities has set its price target at $50. The consensus target is $44.897, and shares closed at $36.87 on Thursday.
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Kroger
This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less, and it is a big Warren Buffett holding. Kroger Co. (NYSE: KR) operates as a retailer in the United States with a focus on combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.
Kroger’s combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood and organic produce. Its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.
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The company’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys. The price impact warehouse stores provide grocery and health and beauty care items, as well as meat, dairy, baked goods and fresh produce items.
Kroger also manufactures and processes food products for sale in its supermarkets and online, and it sells fuel through 1,613 fuel centers. As of January 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.
The dividend yield here is 2.24%. Telsey Advisory has a $55 target price. The consensus target is $52.13, and Kroger stock ended Thursday trading at $45.95 a share.
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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.
Investors receive a 2.57% dividend. Procter & Gamble stock has a $180 price objective at UBS. The consensus target is $164.86. The shares closed Thursday at $148.46.
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While the sell-side on Wall Street is always looking for the proverbial bright side, the reality is we could be on the precipice of a big move lower. So, safe stocks are the way to go now. These Buffett holdings are solid ideas for nervous investors who want to stay in the game but are leery of what the second half of 2023 has in store for their portfolios.
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