Buffett’s Bullseye: Meet The 4 Stocks That Make Up Nearly 75% Of His Portfolio

Market Trading EssentialsJanuary 1, 2024

3 minutes read

Buffett’s Bullseye: Meet The 4 Stocks That Make Up Nearly 75% Of His Portfolio

Legendary investor Warren Buffett has long preached the importance of passive investing in large-cap stocks.

“Beware the investment activity that produces applause; the great moves are usually greeted by yawns,” said Buffett, who also is a big fan of dividend-yielding stocks, which he calls the secret sauce to Berkshire Hathaway Inc.’s success.

Nearly 75% of Buffett’s portfolio is invested in just five stocks. Take a closer look.

Apple

Buffett has been a long-time supporter of Apple Inc. (NASDAQ:AAPL), which he calls a “better business than any we own.” Approximately 50.04% of his portfolio is invested in Apple, which was valued at over $155 billion as of Sept. 30.

Despite uncertainty in the market, demand for Apple’s products remains strong, with iPhone sales hitting a record high in the fiscal fourth quarter that ended Sept. 30. Apple shares have risen 49% year-to-date, making it one of the best-performing tech stocks this year.

“We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon-neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030,” Apple CEO Tim Cook said.

Wedbush has an Overweight rating on Apple stock with a price target of $250, indicating a potential upside of nearly 30%. Morgan Stanley also has an Overweight rating on the tech behemoth with a price target of $220, indicating a potential upside of over 13%.

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Coca-Cola

Buffett generated nearly $704 million in dividends from his investment in the Coca-Cola Co. (NYSE:KO). His initial investment of $1.3 billion in Coca-Cola stock has multiplied to $25 billion, according to Berkshire Hathaway’s 2022 annual shareholder letter.

Buffett owns 400 million shares of Coca-Cola through Berkshire Hathaway, which accounts for 7.15% of his total portfolio.

Coca-Cola currently pays $1.84 in dividends annually, yielding nearly 3.2% on the current stock price. The Dividend Aristocrat stock has a dividend payout history, as it has hiked its annual dividend payouts for 61 consecutive years.

Despite the volatile market backdrop, Coca-Cola is expected to maintain stable growth momentum, as the company’s revenue is expected to rise by 4.1% in the quarter ending December. The consensus earnings per share (EPS) estimate of $0.48 for the quarter ending in December indicates a 6.7% year-over-year increase.

Bank of America

Berkshire Hathaway owns approximately 1.03 billion shares of Bank of America Corp. (NYSE:BAC), accounting for over 9% of Buffett’s investment portfolio. Shares of Bank of America rose by over 20% in the past three months.

Bank of America has benefitted from the decades-high interest rates, as the bank’s total net income rose by 10% year over year to $7.8 billion in the fiscal third quarter that ended Sept. 30. Its EPS for the quarter amounted to $0.90, indicating an 11% rise from the same period last year.

Bank of America also raised its dividend payouts by 9% back in July, bringing its total annual dividends to $0.96 and yielding 2.89% on the current price.

Odeon Capital Group upgraded its outlook on Bank of America stock from Hold to Buy on Dec. 13 with a price target of $37.94, indicating an over 13% potential upside.

American Express

American Express Co. (NYSE:AXP) is Buffett’s third-largest holding, accounting for 7.22% of Berkshire Hathaway’s stock holdings. With U.S. credit card debt topping $1 trillion in the second quarter, American Express reported an improvement in its financials. Spending by millennial and Gen Z American Express customers rose by 18% year over year in the fiscal third quarter, which ended Sept. 30.

American Express reported record third-quarter revenue for the sixth consecutive quarter, up 13% from the same period last year. American Express’s EPS increased by 34% year over year to $3.30 for the third quarter.

The consensus revenue estimate of $16.01 billion for the quarter ending in December indicates a 13% year-over-year increase. Wall Street expects the American Express EPS to amount to $2.65 for the quarter, indicating a 13% year-over-year increase.