Investors can look at Berkshire Hathaway's massive $324 billion public equities portfolio to find worthy ideas. The largest holdings, like Apple, American Express, and Coca-Cola, get a lot of the attention.
But the conglomerate owns much smaller stakes in other successful industry leaders. Say hello to what might be two of the safest Warren Buffett stocks investors can buy in 2026 -- two holdings that the now-former Berkshire chairman bought many years ago.
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Representing a combined 1.5% of Berkshire's portfolio
As of Feb. 4, Berkshire Hathaway owns $2.7 billion worth of Visa (V 0.52%) shares and $2.2 billion worth of Mastercard (MA 1.06%) shares. Combined, these two positions make up 1.5% of the portfolio. While that's a very small percentage in the grand scheme of things, investors shouldn't let that take away from how dominant these businesses are in their industry.
Visa and Mastercard both benefit from a powerful network effect. Billions of their cards are in use around the world. And they are accepted at more than 150 million merchant locations. With more cards and more places to shop, the value proposition of the platform improves for all stakeholders. Replicating this setup would be a daunting task.
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Key Data Points
Despite all the innovation that's been happening in payments, specifically with new offerings from fintech enterprises, as well as stablecoins, Visa and Mastercard keep reporting strong financial results. In the past 10 years, they have both registered double-digit revenue and diluted earnings-per-share growth on an annualized basis.
The supreme competitive positions that these companies have built are almost impossible to disrupt. This gives investors peace of mind, allowing shareholders to sleep well at night. And that's precisely what makes Visa and Mastercard safe stocks to hold in your portfolio.
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Key Data Points
Safe doesn't guarantee market outperformance
Based on total returns, Visa and Mastercard have both outperformed the S&P 500 index in the past decade. But they have lagged the benchmark over the last five years. Perhaps this is indicative of what's to come.
Because of how durable their growth prospects are, riding the adoption wave of cashless transactions that still has a lot of room to run, these companies are sure to be generating much higher revenue and profits in the future. Investors just shouldn't expect that market-beating gains are a certainty.
The valuations have come down in the past 12 months. They're still not cheap, though. Visa's price-to-earnings ratio of 30.9 is slightly lower than Mastercard's multiple of 32.9. But there's no doubt that investors should have their eyes on these stocks, even though they aren't going to produce outsize returns. They can still provide a solid foundation to a portfolio.
