Many investors are hearing that we are in a stock picker’s market. If that’s the case, then why not take your lead from Warren Buffett? After all, Buffett is one of the world’s best stock pickers.
What do you know about these stocks? If you follow the Buffett playbook, then these stocks will have wide moats that protect them from competition, they are financially sound companies, and they have a proven history of returning capital to investors in the form of dividends and share buybacks.
Another thing you know about Warren Buffett’s investing style is that his preferred timeline for holding stocks is forever. That means that these are stocks that scare investors easily and can help you sleep well at night. That’s also why analysts love these stocks too. Here are three Warren Buffett stocks to consider.
Visa (V)
Visa (NYSE:V) was a fintech (financial technology) stock before the turn went mainstream. The company is one of Warren Buffett’s favorite stocks, and there are many reasons for that.
To begin with, the company has a wide moat. Along with Mastercard (NYSE:MA), Visa has a virtual duopoly in the payment processing space. And the volume of those transactions, on which Visa collects a fee for each, translates into strong revenue and earnings.
This creates a gigantic network effect that is only growing as the world continues to move away from cash. And as the economic data shows, consumers have not been shy about using their credit cards. How long can that last? It’s hard to say. But the fact that many people have been asking the question for over a year should tell you something.
Among the list of Warren Buffett stocks, Visa doesn’t pay an eye-popping dividend. The yield is just 0.76% and the current payout per share is $2.08. But it has increased its dividend for 16 consecutive years and the payout ratio of just 23.9% makes the dividend, and its growth, sustainable.
Bristol-Myers Squibb (BMY)
With much of the attention in the biopharmaceutical industry focusing on GLP-1 weight loss drugs, Bristol-Myers Squibb (NYSE:BMY) presents a profitable alternative. BMY stock is down 28% in the last 12 months. The concern is the patent cliff impacting its currently available drugs.
Reylimid, the company’s multiple myeloma drug, is the first example. Revenue fell 39% due to generic competition. Two other major revenue contributors, Eliquis and Opdivo, face expiring patent protection in 2026 and 2028 respectively.
But the company has a deep pipeline. Analysts expect that many new drugs will be approved before their current drugs face the patent cliff. Of course, the company has paid for some of these drugs through acquisitions, which could impact earnings in the short term.
However, Buffett has long expressed his belief that debt is useful when it leads to growth as seems to be the case with Bristol-Myers Squibb. And you can combine that with a dividend that currently pays a 4.76% yield. So, you can understand why this is one of the Warren Buffett stocks to buy now.
Occidental Petroleum (OXY)
The April 10, 2024 reading of the March CPI showed that the rate of inflation is expanding. The biggest reason for that is energy, specifically oil. This is a major story that is not going to go away anytime soon. And, if the Federal Reserve does cut rates, it will only accelerate demand for oil.
That’s the reason you should consider Occidental Petroleum (NYSE:OXY). Buffett has purchased the stock on a number of occasions in the last 12 months and now owns over 25% of the company. Buffett has said he’s a fan of OXY’s Chief Executive Officer (CEO) Vicki Hollum and the way she’s managed the company’s balance sheet.
After slashing its dividend in 2020, OXY began to raise the dividend in 2022 and continues to raise it aggressively. Plus with a payout ratio of just 22%, there’s plenty of room for dividend growth to continue.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.