It has been really nice, and while the current rally may indeed still have more legs, there are some very dark clouds on the horizon for the second half of 2023. Profligate government spending has propped up the economy for the past two-plus years, and while the government can continue to print money, consumers cannot. Now with all the old largesse from handouts having long been spent, many Americans are ramping up credit card debt at a record pace — credit cards with interest rates as high as 20% and more.
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What are investors who have been sold that artificial intelligence is the wave of the future (which is indeed highly likely) to do now? The best idea is to take profits and move to safer stocks for the second half of 2023. The 500 basis points of interest rate increases are going to show up all through the economy soon, and there is an excellent chance rates will be headed higher in the second half of the year. Plus, moving to safer stocks still keeps you in the game if stocks move higher.

We screened the Berkshire Hathaway portfolio looking for companies that pay dependable dividends, are rated Buy at top Wall Street firms and offer substantial upside potential over the next six months. Six top stock made the cut, and all make sense for growth and income investors looking to take profits and move to safe ground.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Ally Financial

The bank with no buildings may be poised to have a strong second half of 2023. Ally Financial Inc. (NYSE: ALLY) is a digital financial services company that provides various digital financial products and services to consumer, commercial and corporate customers primarily in the United States and Canada. It was formerly known as GMAC and changed its name in May 2010.

Its Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floor plans and other lines of credit to dealers, warehouse lines to automotive retailers and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles and vehicle-remarketing services.

The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products, and it underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.
Ally’s Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings.
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The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies, leveraged loans and commercial real estate products to serve companies in the health care industry. The company also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services.

Investors receive a 4.65% dividend. Citigroup has a $40 target price on Ally Financial stock. The consensus target is $31.76, and the stock closed on Wednesday at $27.01 a share.

Chevron

This energy giant is a solid play for investors who are more conservative and looking to be positioned in the sector. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide. The company sports a sizable dividend and has a solid place in natural gas and liquefied natural gas (LNG).

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 LNG; transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as 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 massive second-quarter results and remains one of the best ways to play energy safely.

Chevron stock comes with a 3.92% dividend. The $208 Raymond James target price is well above the consensus target of $189.46 and Wednesday’s $154.92 closing share price.

Citigroup

This top bulge bracket bank 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.
Citigroup 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.
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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.

Shareholders receive a 4.41% dividend. The Oppenheimer price target of $78 is a Wall Street high. Citigroup stock has a $57.47 consensus target, and shares closed on Wednesday at 46.23.

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. It is also one of America’s most trusted food and drink brands.

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 4.50%. BofA Securities has set its price target at $50, while the consensus target is $43.92. Kraft Heinz stock closed on Wednesday at $35.02.

Kroger

This grocery chain giant is always a solid idea when the going gets rough as people tend to go out less. 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.

Its 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.
Kroger’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.
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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.

Kroger stock investors receive a 2.49% dividend. The BofA Securities $65 target price compares with a consensus target of $50.92 and Wednesday’s close was at $47.17.

Procter & Gamble

The company offers a tempting 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.

Shareholders receive a 2.53% dividend. Procter & Gamble stock has a $180 price objective at UBS. The consensus target is $164.86. The shares closed at $149.99 on Wednesday.

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These are six top Warren Buffett holdings for investors looking for yield and a modicum of growth. While not invincible, they will surely hold up better for the rest of 2023 and into next year than technology and some other more volatile sectors that are very overbought now. The stock market has some big downside potential from where we are now, and playing it safe just makes sense until the Federal Reserve is done raising interest rates, which may not be until the first quarter of 2024.

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