Warren Buffett, the legendary investor, has been selectively buying stocks despite Berkshire Hathaway’s record-high cash stockpile. In the second quarter, Buffett initiated new positions in Heico Corporation and Ulta Beauty.
Berkshire Hathaway (+27.0%) is substantially outperforming the S&P 500 (+13.4%) and 4 of the 6 largest companies by market capitalization: MSFT (+6.8%), GOOGL (+8.0%), AMZN (+12.8%), and AAPL (+14.7%) year-to-date. #Buffett $BRK.A $BRK.B
— David Kass (@DrDavidKass) September 7, 2024
He also increased stakes in existing holdings like Chubb Limited, Occidental Petroleum, Liberty Media Series A and C, and Sirius XM Holdings.
In August, Buffett added more shares of Bank of America after trimming Berkshire’s position earlier this year. Among these recent buys, Bank of America stands out as the best pick for income investors.
Berkshire sold another $760 million of Bank of America on September 3, 4 and 5 at an average price of about $40.50 per share. #Buffett $BRK.A $BRK.B $BAC
— David Kass (@DrDavidKass) September 6, 2024
While SiriusXM offers a higher forward dividend yield of 3.41%, Bank of America’s 2.56% yield is more attractive due to its consistent dividend growth.
BofA has increased its dividend for 11 consecutive years, compared to SiriusXM’s six years. SiriusXM faces challenges from declining revenue and increased competition from digital content providers.
Another busy week on the Berkshire Hathaway beat.
And there's no better way to catch up on it all than my weekly summary of Berkshire & Buffett news.
Including birthday tributes for Warren Buffett and updates on Bank of America, RC Willey, Sirius XM, Oxy, and Chubb. pic.twitter.com/JcLId9zj6N
— Kevin Carpenter (@kejca) September 6, 2024
In contrast, Bank of America has responded well to threats from online banks and digital competitors, earning recognition as the “Best Consumer Digital Bank in the U.S.” and “World’s Best Digital Bank.”
Buffett’s confidence in Bank of America is evident, as it is Berkshire’s third-largest position worth nearly $36 billion.
Buffett’s top pick for dividends
On the other hand, SiriusXM is in a much smaller position, valued at less than $415 million. Considering these factors, Bank of America is the best choice for income investors among Buffett’s recent stock purchases.
Buffett has also shown confidence in his own company by repurchasing $2.9 billion of Berkshire Hathaway stock in the first half of 2024. This marks six straight years of buybacks, totaling $78 billion during that period. Under Buffett’s leadership, Berkshire Hathaway has delivered impressive returns of 20% annually over nearly six decades.
The company’s diversified portfolio of subsidiaries across various industries and prudent financial management have enabled it to outperform the S&P 500 during economic downturns. Berkshire Hathaway’s collection of well-vetted, durable businesses makes it a strong bet for long-term growth, especially for investors concerned about market uncertainties. Buffett’s $318 billion investment portfolio at Berkshire Hathaway includes eight “forever” stocks that account for 34% of the portfolio.
These key holdings are American Express, Coca-Cola, Occidental Petroleum, and five Japanese trading houses: Mitsubishi, Itochu, Mitsui, Marubeni, and Sumitomo. Through these strategic investments, Buffett continues demonstrating his commitment to long-term value creation, solidifying his reputation as one of the most successful investors ever.
