The narrative has shifted for technology stocks of late. After rallying 115% from April 2020 through December 2021, the Nasdaq Composite has stumbled 24% since the start of 2022. The stock market as a whole has been flustered lately in the wake of a more hawkish outlook for Fed policy tightening to combat inflation. Concerns about economic impacts from Russia's war against Ukraine have also weighed on the market and adversely impacted investor sentiment.
The technology sector has been highly vulnerable as investors have dumped richly priced speculative growth stocks in exchange for value-oriented ones. This is favorable for those who employ Warren Buffett's investing strategy. The Oracle of Omaha tends to buy companies with durable business models, cheap valuations, wide moats, and handsome dividend yields. During times of economic uncertainty, these types of businesses generally outperform the broader market.
Here are two Warren Buffett stocks that pay you to own them and could help mitigate portfolio risk today.
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1. Verizon Communications
Verizon Communications (VZ 0.03%) shares have traded relatively flat year-to-date, returning negative 3% vs. the S&P 500's negative 14% return in the same timeframe. The multinational communications conglomerate released a largely in-line Q1 2022 report -- total revenue grew 2.1% year-over-year to $33.6 billion, driven by a 28.2% surge in its wireless equipment segment, which ended the quarter with $6.3 billion in sales. The company's service and other category, which represented more than 80% of total sales in Q1, retreated 2.5% to $27.2 billion.
Adjusted earnings per share finished down 0.7% year-over-year at $1.35. Analysts forecast Verizon's top and bottom lines to expand a modest 2.3% and 0.4% year-over-year in 2022, up to $136.7 billion and $5.41, respectively. Investors aren't interested in the communications provider for its growth; rather, they are attracted to its sturdy business model and lucrative dividend. Currently, the company pays a $0.64 per share quarterly dividend, translating to a 5.04% yield.
If you buy $10,000 worth of Verizon stock right now, you'll own roughly 200 shares of the company. Assuming the quarterly dividend stays constant, that means you'll receive just over $500 in dividend payments on an annual basis. The point is that shareholders earn this passive income each quarter no matter what, which can be extremely valuable during a bear market. And since the stock is trading at just 9.4 times forward earnings at the moment, investors are able to accumulate shares at a fair price.
2. Kraft Heinz
Kraft Heinz (KHC 0.85%) has demonstrated some persistence year-to-date, as investors have snapped up consumer staples stocks to counter the current macro environment. The major advantage of consumer staples businesses is that they sell essential day-to-day products; hence, their operations are hardly affected by the economic landscape. The multinational food company kicked off 2022 in great fashion. In its first quarter, the company's total sales beat Wall Street estimates by 4%, ending at $6.05 billion, and its adjusted earnings per share outperformed forecasts by 13%, finishing at $0.60.
The company's operating margin also expanded 141 basis points to 18.4%, a nice climb from a year ago, especially in view of the existing macro environment. In 2022, analysts project total sales to pull back 1.6% to $25.6 billion, and they forecast adjusted EPS to recede 8.2% to $2.69.
Even though the company's growth rates won't sweep you off your feet, Kraft Heinz operates a steady business and pays a great dividend -- two characteristics that go a long way in a turbulent stock market. The food company provides investors with a $0.40 per share quarterly dividend for a 4.39% yield, and it's poised to potentially outperform the broader market moving forward so long as current headwinds persist.
