If you walked down the street and asked random people to name a famous investor, I'm willing to bet that Warren Buffett's name gets mentioned more than anybody else. He's been the poster child for investing success, and it's rightfully deserved when you consider the success he and his company, Berkshire Hathaway, achieved.
Buffett and Berkshire Hathaway's success has put them in a position where investors choose to mirror their investments to try to replicate a bit of their success.
For investors looking for Buffett stocks to add to their portfolios, Berkshire Hathaway's top five holdings are a good go-to. With $1,000, I would invest $200 into each company and trust the long-term results.
| Company | Percentage of Berkshire Hathaway Portfolio |
|---|---|
| Apple (AAPL +0.00%) | 46.3% |
| Bank of America (BAC 0.32%) | 8.2% |
| American Express (AXP 1.26%) | 6.7% |
| Coca-Cola (KO 0.91%) | 6.6% |
| Chevron (CVX 0.96%) | 6% |
Data source: Berkshire Hathaway's 13F filing. As of Aug. 14, 2023.
1. Apple
The world's most valuable public company needs no introduction. Apple revolutionized a lot of the tech industry and made many investors a lot of money along the way. In the past 10 years, the stock is up over 900%.
NASDAQ: AAPL
Key Data Points
Apple came to dominance largely because of the iPhone, which you could argue is the most successful consumer product of all time. The iPhone still represents a large portion of Apple's revenue (48% in its fiscal third quarter), but the company has been diversifying its revenue streams and becoming less reliant on it.
As Apple expands into different services, it has the bank account and technological expertise to be a real disruptor regardless of industry.
2. Bank of America
It hasn't been the best year for Bank of America's stock, but the financial industry is cyclical in nature. It shouldn't be too much cause for concern for long-term investors.
NYSE: BAC
Key Data Points
Bank of America is one of only eight banks that the U.S. Federal Reserve deems as "too big to fail," or globally systematically important. It's received that designation because it's intertwined into the U.S. financial system to the point that its failure could be catastrophic. Along with this comes more regulatory oversight and stress testing, which should help protect the bank from any significant downturns from mismanagement.
With a yield consistently double the S&P 500 average, Bank of America can be a 2-for-1 for investors.
3. American Express
When it comes to total volume for credit cards, American Express comes in third place, trailing Visa and Mastercard, with $427 billion in total network volume in Q2 2023.
NYSE: AXP
Key Data Points
What separates American Express from companies like Visa and Mastercard is how its payment network is set up. Visa and Mastercard process credit card transactions, but they don't issue credit cards -- their partner banks do. American Express, on the other hand, issues credit cards and processes transactions.
This setup helps American Express increase its share of revenue from transaction fees, and it seems to be paying off. The company increased its revenue by 70% in the past three years (although a pandemic slump helped this).
American Express has done a better job than any credit card company when it comes to courting customers via its world-class rewards programs and customer service. It has found its lane and operates in it very well.
4. Coca-Cola
Coca-Cola may very well have the world's most recognizable brand with its flagship soda. However, the company has expanded beyond that to include household name brands in water, coffee, tea, sports drinks, and ready-to-drink alcohol.
NYSE: KO
Key Data Points
Coca-Cola has impressively managed to get distribution to most of the world, and it seems like its sole focus on beverages has allowed it to operate more efficiently than its competitors. PepsiCo is Coca-Cola's biggest competitor and brings in around $10 billion more in revenue. Despite that, both companies have comparable net income.
Coca-Cola is a shareholder-friendly blue-chip stock that offers a consistent dividend and stable long-term growth.
5. Chevron
Chevron is the third-largest oil and gas company in the world, with a market cap of over $320 billion. Since it plummeted in March 2020, Chevron's stock has increased over 180%.
NYSE: CVX
Key Data Points
The oil business divides operations into three broad segments: upstream, midstream, and downstream. Luckily for Chevron (and its investors), it operates in all three. It handles exploration and production, transportation and storage, and refining and marketing.
Having operations in all phases of the pipeline allows Chevron to hedge against the cyclical nature of the oil and gas industry. For example, downstream operations tend to be more profitable when oil prices are low, and upstream operations generally perform better when oil prices are high.
Chevron is a more stable investment option than competitors specializing in a single segment.
