Many folks would trust the investing smarts of Warren Buffett more than their own. That's entirely reasonable, as it can be hard to come up with a more successful long-term investor than Buffett.
Indeed, over nearly 60 years, he has increased the value of shares of his company, Berkshire Hathaway, by an average annual rate of 19.8%. To appreciate how impressive that is, know that the S&P 500 of 500 large American companies averaged 10.2% over the same period (which is still a quite respectable growth rate!).
So how is Buffett investing now? And what are the best Warren Buffett stocks to invest in today? Read on for a few investment ideas to consider, whether you have $1,000 or $100,000 to invest.
Image source: The Motley Fool.
Buffett's investments
Berkshire Hathaway encompasses dozens of companies owned outright (such as Dairy Queen International, See's Candies, GEICO, Benjamin Moore, and the entire BNSF railroad), as well as shares of stock in dozens of companies.
For many years, Buffett made the lion's share of investing decisions for Berkshire, but that share has shrunk in recent years, now that he has two investing lieutenants, Ted Weschler and Todd Combs, in place. They each are responsible for billions of dollars, and when Buffett retires at the end of the year, they'll likely be managing even more.
That's important to know, because when you read that Buffett has added shares of such-and-such company to his portfolio, it might not actually be Buffett who made the purchase. Still, since his lieutenants are savvy investors, too, it's reasonable to be interested in what they've been buying and selling.
To some degree, the "best" Buffett stocks to buy might be ones that he (or Weschler or Combs) bought into most recently. Per the latest regulatory filings from the company, here are three recent purchases, each of which is a case of Berkshire adding to shares already owned.
1. Occidental Petroleum
Occidental Petroleum (OXY 0.75%) has become a major holding for Berkshire in recent years, with Berkshire recently owning nearly 27% of the company and it being Berkshire's sixth-largest stock holding. (The largest positions are in Apple, American Express, and Coca-Cola.)
Why Occidental? Well, it's a major energy company (but not one of the biggest), with significant operations in the Permian Basin, which is a less expensive place to get oil and natural gas. With its sites in western Texas and southeastern New Mexico, many expect Oxy (as it's nicknamed) to be a major source of energy for the U.S. in the years ahead.
Some have been worried about Occidental's debt load, but it has been effectively reducing it. It's looking to grow, and for those willing to be patient, it's sporting a dividend that recently yielded 2.3%.
2. Sirius XM Holdings
Buffett is famous for staying within his "circle of competence," and for steering clear of many tech stocks that he doesn't fully understand. So Sirius XM Holdings (SIRI -1.92%) may be a purchase by a lieutenant. Offering satellite radio and streaming services, Sirius is viewed by many as a "legal monopoly" -- and a "ridiculously cheap" one, at that.
Berkshire now owns more than a third of the company, and it's the 14th-biggest holding in Berkshire's stock portfolio. Bulls like the advertising revenue it collects and its subscription business model, while bears think its premium pricing may be too steep and worry a bit about its future once Howard Stern retires.
3. Domino's Pizza
While many investors are chasing hot artificial intelligence (AI) stocks, Buffett is the type to admire more old-school stalwarts, such as Domino's Pizza (DPZ 1.64%). Berkshire recently owned 7.6% of Domino's. The company is actually becoming more of a tech stock recently, with advances in its digital ordering technology and a corresponding app.
With more than 21,000 Domino's locations in more than 90 markets and over $19 billion in annual revenue, the company is a titan in the world of pizza. Its first-quarter results featured global retail sales up 4.7% year over year. With 99% of its locations franchises, the company's business model is much less capital-intensive than if it owned thousands of brick-and-mortar stores.
Domino's is also a dividend-paying stock, recently yielding 1.5%. That payout has been growing too, with its total annual payout, recently $6.50 per share, up from $4.40 in 2020 and $2.20 in 2018.
Dig deeper into any of these companies if they interest you. And remember that you can do quite well and make it easy on yourself by just sticking with a Buffett-endorsed S&P 500 index fund.
