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Warren Buffett has amassed a huge fortune investing in stocks. he bought Berkshire Hathaway in 1965, turning the former textile manufacturer into a holding company for its investments. Today, it heads the list of the oldest S&P 500 CEOs
So what does Berkshire currently have?
Let’s explore the company’s top five stocks, which account for more than three-quarters of Buffett’s portfolio.
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With 41.4% of the portfolio, Apple (NASDAQ:AAPL) is Buffett’s largest holding. Berkshire first acquired a stake in the American tech giant in 2016.
Apple’s stock price is down 5% over the past year, but there are factors that could push shares higher. For example, you have exciting product launches in your pipeline.
The company is expected to launch a new AR/VR headset this spring, as well as the iPhone 15 in September. New products have added value for long-term investors through stock price appreciation, and I think this year’s innovations could help the tech titan regain its strength.
In addition, there is great potential to expand service offerings, such as Apple Pay. At 71%, the gross margin for services is higher than the gross margin for products of 37%.
That said, a price-earnings ratio of 25.66 is a risk, especially if demand for the company’s new products isn’t enough to justify a higher valuation.
Financial heavyweights
Finance is one of Buffett’s favorite investments. Bank of America is its second largest holding with 10.6% and amexpress it is the fourth largest at 8.1%.
With Bank of America, I see the logic for Buffett in keeping his stake. As the Federal Reserve continues to raise rates, the bank should benefit from a boost to its net interest income.
However, a slowdown in the US housing market poses significant risks. If defaults increase or activity slows down, revenue could take a hit.
American Express has long been a cornerstone of Berkshire’s portfolio. I think the future of the company looks bright thanks to its popularity among younger customers. More than 60% of its new proprietary consumer account acquisitions in 2022 were Millennial or Gen Z consumers.
However, the fact that the company earns its income from interest rate differentials rather than transaction fees such as Visa either MasterCard creates a higher risk of volatility than other actions in the payments arena.
Dividend Stock
Buffett also has large holdings in dividend-leading stocks. oil and gas giant Chevron is its third largest holding with 8.3% and soft drink conglomerate Coca Cola completes the quintet with 7.1% of the portfolio.
Chevron appears to be well positioned to benefit from the continued disruption to commodity markets caused by the war in Ukraine. It offers a dividend yield of 3.66%.
Coca-Cola’s business model has stood the test of time. The company has increased its dividend for 60 consecutive years. It offers a yield of 3.1%.
Dividends can be cut or suspended. Both stocks face this risk. However, in my opinion they seem like reliable passive income generators as is.
How I follow Warren Buffett
My preferred way to follow Warren Buffett is to own Berkshire Hathaway stock.
Although I own Coca-Cola stock for passive income (Berkshire reinvests its retained earnings), I’m not buying the others at this time.
That’s simply because I’m happy with the exposure that my Berkshire stock already offers to these stocks.
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