Although Warren Buffett will no longer be CEO of Berkshire Hathaway -- the company he has run for more than six decades -- at the end of the year, Buffett will remain chairman of the company's board of directors.
I'm also guessing that Buffett's legacy and investing philosophy will live on at Berkshire long after he's gone. After all, Buffett is arguably the greatest investor of all time and has led Berkshire's stock to market-crushing returns during his tenure as CEO.
Here are two Warren Buffett stocks to buy hand over fist in December.
Image source: The Motley Fool.
1. Coca-Cola
Berkshire Hathaway first purchased Coca-Cola (KO +0.32%) in 1988, and it's one of the longest-running stocks in the large conglomerate's massive roughly $313 billion equities portfolio. It's also one of Berkshire's largest positions, making up nearly 9% of the total portfolio.
While Coca-Cola is unlikely to be a high-growth stock that benefits from artificial intelligence, it is one of those stocks investors will be glad they own in times of uncertainty and through the entire business cycle. That's because it's an elite consumer staples stock that creates products that individuals keep in their budgets, even during financially difficult times.
NYSE: KO
Key Data Points
Coca-Cola's iconic brand has become a significant moat in the beverage industry. The company has also significantly expanded its portfolio, as people became increasingly health-conscious and shifted toward healthier alternatives. Coca-Cola now offers a range of products, including sports drinks, various water brands, coffee, alcohol, and innovative new beverages like probiotic-infused soda.
Coca-Cola is also one of the strongest dividend payers in the market. It's a Dividend King, meaning it has paid and increased its annual dividend for at least 50 consecutive years. In fact, Coca-Cola recently announced its 63rd consecutive dividend hike earlier this year, and it has a dividend yield of roughly 2.9%. The company has seen free cash flow take a temporary hit due to a contingent consideration payment related to the company's acquisition of Fairlife and a large payment associated with an ongoing tax dispute with the Internal Revenue Service.
However, core free cash flow generation is still strong. Ultimately, Coca-Cola should remain a resilient stock throughout the economic cycle, and its solid dividend yield will become even more attractive as interest rates fall.
2. Chevron
The large U.S. oil and gas producer Chevron (CVX +3.31%) has put up disappointing performance this year, with the stock widely trailing the broader stock market. However, the bulk of these struggles can be attributed to falling oil prices, with the price of West Texas Intermediate crude oil hovering around $60 per barrel. Oil prices have struggled this year as supply continues to outpace demand. The Organization of the Petroleum Exporting Countries (OPEC) has increased production to regain market share from competitors, such as the U.S.
Despite the challenging environment, Chevron continued to operate efficiently during the quarter, producing 4.1 million barrels of oil per day. That's up more than 20% year over year, largely due to the company's acquisition of Hess and strong activity in the Permian Basin, the Gulf of Mexico, and Kazakhstan.
Chevron also continued to generate strong adjusted free cash flow in the quarter of $9.9 billion, which is 20% higher on a year-over-year basis when crude prices were $10 per barrel higher.
NYSE: CVX
Key Data Points
Additionally, the company continued to return capital to shareholders, paying out $3.4 billion in dividends and $2.6 billion through share repurchases. Chevron's dividend yield exceeds 4.5%, and the company has a strong track record of paying dividends, regardless of oil prices, with 38 consecutive years of payments.
In the longer term, Berkshire likely believes that oil is a finite resource that will eventually experience a more balanced supply-and-demand dynamic, as production slows in future decades, leading to significantly higher oil prices. Given the significant power consumption of artificial intelligence, the world is likely to require additional power from all available sources. Oil is also a commodity that can hedge inflation, so investors will likely want to include some exposure to oil and gas in their portfolios.
