At the age of 93, Warren Buffett's net worth has reached $116.2 billion. Buffett has consistently prioritized a deep understanding of a company's inner workings before making an investment. His investment strategy revolves around identifying businesses with robust and scalable models, poised for expansion and market dominance, ultimately benefiting from the resulting increase in stock value. Buffett ranks among the highest-earning hedge fund managers, thanks to the consistent returns his investments have historically yielded through Berkshire Hathaway. The renowned investor possesses a remarkable track record with his holding company, Berkshire Hathaway, which has delivered an annualized return of 19.8% from 1965 to 2022. This figure is nearly double the 9.9% annualized return of the S&P 500. Lately, the billionaire has emerged as one of the most proactive hedge fund managers, capitalizing on the high-interest rate environment. Bolstered by a substantial cash reserve of $147 billion at the close of June, the iconic investor has been actively seeking out investments capable of delivering significant returns, particularly with short-term rates exceeding 5%. To illustrate, he started betting on the housing market during the June quarter, acquiring stakes in three construction companies. These include NVR, Inc. (NYSE:NVR), Lennar Corporation (NYSE:LEN), and D.R. Horton, Inc. (NYSE:DHI).
On the other hand, however, the investor has started shifting his perspective on the banking sector. Starting from 2020, the 'Oracle of Omaha' has divested from several financial institutions that have experienced significant declines this year: Wells Fargo & Company (NYSE:WFC) (-5%), The Goldman Sachs Group, Inc. (NYSE:GS) (-14%), M&T Bank Corporation (NYSE:MTB) (-23%), U.S. Bancorp (NYSE:USB) (-28%), and The PNC Financial Services Group, Inc. (NYSE:PNC) (-30%). As of the end of June, the market value of Berkshire's holdings in banking, financial, and insurance stocks stood at $67 billion, with an initial cost base of $24 billion. This segment of the conglomerate's stock portfolio was valued at $102 billion with a $40 billion cost base at the close of 2019. Notably, it comprised only 19% of Berkshire's total portfolio value in June, a substantial drop from 41%, highlighting the extent of Berkshire's divestitures during this period.
Buffett's shift in stance on banks emerged in April when he expressed concern that some banks were inflating their earnings and misleading investors by valuing their assets at historical cost instead of their current market value. He also criticized them for mismanaging their assets and liabilities, such as using immediately withdrawable customer deposits to acquire long-term bonds. It's important to note that Buffett and his team haven't completely abandoned investments in banks, and they have not been immune to the challenges faced this year. Bank of America Corporation (NYSE:BAC) remains Berkshire's second-largest holding after Apple Inc. (NASDAQ:AAPL), even though its stock has experienced a 23% decline since the beginning of the year.
With these details in mind, we'll be looking at some stocks that are favored by Warren Buffett as long-term stock options. Some notable names on this list include the likes of Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL), among others listed below.
Best Long-Term Stocks To Buy According To Warren Buffett
Our Methodology
In order to compile our selection of the best long-term stocks to buy according to Warren Buffett, we began by analyzing the billionaire's stock portfolio and chose to highlight the stock holdings that have remained within his portfolio for at least 5 years. Next, we assessed the number of hedge fund investors associated with each stock based on Insider Monkey’s survey of 943 funds during the first quarter of this year. Using this information, the stocks were ranked.
VeriSign Inc. (NASDAQ:VRSN) is an American company based in Reston, Virginia, United States, that operates a diverse array of network infrastructure that allows firms to maintain their servers, access domain names, and run security applications. In the third quarter of 2023, VeriSign Inc. (NASDAQ:VRSN) posted revenues of $376 million, marking a 5.4% increase compared to the same period in 2022. The company's operating income for the third quarter of 2023 was $254 million, up from $237 million in the third quarter of 2022. In addition, the company reported a net income of $188 million and diluted earnings per share of $1.83 for the third quarter of 2023, as opposed to a net income of $169 million and diluted EPS of $1.58 for the corresponding quarter in 2022.
Warren Buffett initially invested in VeriSign, Inc. (NASDAQ:VRSN) in 2012, acquiring 3.69 million shares. As of the second quarter of 2023, Berkshire Hathaway held 12.82 million shares of VeriSign, Inc. (NASDAQ:VRSN), valued at approximately $2.90 billion. This investment represents 0.83% of Warren Buffett's 13F portfolio.
By the end of this year’s second quarter, 35 of the 910 hedge funds part of Insider Monkey’s database had held a stake in the company. Following Warren Buffett, William Von Mueffling's Cantillon Capital Management is VeriSign, Inc. (NASDAQ:VRSN)'s largest shareholder, which owns 1.79 million shares that are worth $406.5 million.
Much like Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL), VeriSign Inc. (NASDAQ:VRSN) is holds a favored position among Warren Buffett's long-term stock options.
The Kraft Heinz Company (NASDAQ:KHC), frequently referred to as Kraft Heinz, is a U.S.-based multinational food corporation that resulted from the merger of Kraft Foods and H.J. Heinz Company. It operates with dual headquarters in Chicago and Pittsburgh. The company is engaged in the production and distribution of a diverse range of products, encompassing items such as cheese, prepared meals, meats, dairy products, condiments, coffee, and more. The company currently issues a quarterly dividend of $0.40 per share, resulting in a dividend yield of 5.02% as of October 26.
During the second quarter of 2023, The Kraft Heinz Company (NASDAQ:KHC) achieved revenues of $6.7 billion, reflecting a 2.6% increase compared to the corresponding period the previous year. Year-to-date, its operational cash flow reached $1.6 billion, and its free cash flow exceeded $1.1 billion.
The Kraft Heinz Company (NASDAQ:KHC) represented 3.31% of Warren Buffett’s portfolios in Q2 2023. His hedge fund owned over 325.6 million shares in the company worth over $11.5 billion.
At the end of Q2 2023, 39 hedge funds owned stakes in The Kraft Heinz Company (NASDAQ:KHC), up from 34 in the previous quarter, as per Insider Monkey’s database. The overall value of these stakes is over $12.2 billion.
The Kroger Co. (NYSE:KR), often referred to as Kroger, is an American retail corporation that manages a network of supermarkets and multi-department stores across the United States. Spanning 35 states, the company operates over 2,700 supermarkets and multi-department stores, solidifying its position as one of the globe's major food retailers.
On September 14, The Kroger Co. (NYSE:KR) announced its regular quarterly dividend of $0.29 per share, maintaining its consistent dividend policy. This marked the company's 17th consecutive year of dividend growth, reinforcing its status as one of the best long-term stocks. As of October 26, the stock boasted a dividend yield of 2.59%, making it an attractive choice for income-seeking investors.
Warren Buffett’s Berkshire Hathaway owned 50 million shares in The Kroger Co. (NYSE:KR) at the end of Q2 2023, worth over $2.3 billion. The company represented 0.67% of the firm’s portfolio.
At the end of the second quarter of 2023, 43 hedge funds tracked by Insider Monkey owned investments in The Kroger Co. (NYSE:KR), which remained unchanged from the previous quarter. The overall value of these stakes is over $3.13 billion.
Oakmark Funds funds mentioned The Kroger Co. (NYSE:KR) in its Q3 2023 investor letter. Here is what the firm has to say:
“The Kroger Co. (NYSE:KR) is the second-largest grocery retailer in America behind only Walmart. Although the grocery industry is highly competitive, Kroger’s scale advantages allow it to offer a more compelling value proposition than smaller peers and earn higher returns on capital. In recent years, the market has assigned Kroger a lower multiple due to concerns that e-commerce would disrupt traditional brick-and-mortar grocery. However, we believe the company’s performance through the pandemic highlighted that its store footprint, distribution infrastructure, technology investments and strong brand all position the company well for a world with higher online grocery adoption. The stock trades for just 10x our estimate of next year’s EPS, which we believe is attractive given Kroger’s competitive positioning and earnings growth outlook. The pending merger with Albertsons has the potential to drive accelerated earnings growth and further scale advantages. If the merger is not approved, the company will have the capacity to return approximately 25% of its market cap to shareholders.”
Moody's Corporation (NYSE:MCO), often referred to as Moody's, is a prominent American business and financial services organization. It serves as the umbrella company for Moody's Investors Service (MIS), a well-known American credit rating agency, and Moody's Analytics (MA), a provider of financial analysis software and services, operating primarily within the United States.
Berkshire Hathaway initiated its investment in Moody's Corporation (NYSE:MCO) in 2000. By the close of the second quarter of 2023, the hedge fund had accumulated holdings valued at more than $8.5 billion in the company, constituting approximately 2.46% of the fund's 13F portfolio.
According to data available from Insider Monkey's database in the second quarter of 2023, 60 hedge funds had holdings in Moody's Corporation (NYSE:MCO), reflecting an increase from 51 funds in the preceding quarter. The collective value of these holdings exceeded $17 billion.
Akre Capital Management mentioned Moody’s Corporation (NYSE:MCO) in its Q2 2023 investor letter. Here is what the firm has to say:
“The Fund owns many businesses that stand to benefit enormously from A.I. Moody’s Corporation (NYSE:MCO) recently announced a new strategic partnership with Microsoft to leverage A.I. into its global risk assessment products and their development. The top five positive contributors to performance during the quarter were Moody’s, Mastercard, CoStar, Constellation Software, and Adobe.”
Founded in 1892, The Coca-Cola Company (NYSE:KO) is an American multinational corporation renowned for its iconic beverage, Coca-Cola. In addition to its flagship product, the company plays a significant role in the manufacturing, distribution, and marketing of a diverse range of non-alcoholic beverage concentrates, syrups, and notably, alcoholic beverages within the beverage industry. Recognized as one of the best long-term stocks for investment, the company has consistently increased its dividends for the past 61 years, currently offering a quarterly dividend of $0.46 per share with a dividend yield of 3.31%, as of October 26. As one of the largest beverage corporations globally, The Coca-Cola Company (NYSE:KO) holds a significant position in Warren Buffett's portfolio. Buffett, who has maintained a stake in the company since 2010, has famously expressed his unwavering commitment to retain his shares in the company.
During the third quarter, The Coca-Cola Company (NYSE:KO) exceeded expectations by outperforming estimates in both revenue and earnings, even after implementing price increases. The beverage company reported a net income of $3.09 billion, equivalent to $0.74 per adjusted share. This marked a 7% increase from the same quarter in the previous year and exceeded the consensus estimate of $0.69 cents per share. Revenue for the quarter amounted to just under $12 billion, showcasing an 8% growth compared to the previous year and surpassing the estimated $11.4 billion.
At the end of Q2 2023, 61 hedge funds in Insider Monkey’s database reported having stakes in The Coca-Cola Company (NYSE:KO), which remained unchanged from its previous quarter. The collective value of these stakes is over $27.2 billion.
General Motors, formally the General Motors Company (NYSE:GM), is an American multinational automotive manufacturing company headquartered in Detroit, Michigan, United States. The automotive manufacturer pays a quarterly dividend of $0.09 per share and has a dividend yield of 1.26%, as of October 26.
Patrick Hummel at UBS upgraded General Motors Company (NYSE:GM) from Neutral to Buy on September 13 while placing a $44 price target on the stock. Buffett initiated his position in the company during the first quarter of 2012 and has been adjusting his holdings with each available opportunity since then.
By the end of this year’s second quarter, 72 of the 910 hedge funds part of Insider Monkey’s database had also bought General Motors Company (NYSE:GM)’s shares. The largest investor is Nativism Global Asset Management’s Harris Associates through a $1.49 billion investment.
Patient Capital Opportunity Equity Strategy made the following comment about General Motors Company (NYSE:GM) in its Q2 2023 investor letter:
“We like other names mostly ignored by the market for similar reasons. Names like Expedia (EXPE), General Motors Company (NYSE:GM), and Delta Air Lines. These companies have strong returns on capital (14%+), good competitive positions, cheap valuations (all double-digit free cash flow yields), and are returning capital to shareholders. We trust the managements to take advantage of their depressed stock prices and create long-term shareholder value.”
American Express Company (NYSE:AXP) is a prominent American multinational corporation operating in the financial services sector. The company is headquartered in New York City and is primarily known for its payment card services. American Express offers a comprehensive platform that facilitates digital payments, ensuring secure and convenient transactions. It is recognized as one of the world's leading and valuable enterprises and is included in the Dow Jones Industrial Average, comprising 30 significant companies. At the conclusion of the second quarter of 2023, American Express Company (NYSE:AXP) was the third-largest holding in Berkshire Hathaway's portfolio, with an AXP stake valued at over $26.4 billion. This stake represented 7.58% of Berkshire Hathaway's 13F portfolio.
The company has a 34-year run of paying regular dividends to shareholders, making it one of the best long-term stocks on our list. It currently pays a quarterly dividend of $0.60 per share and has a dividend yield of 1.67%, as of October 26.
In the third quarter of 2023, American Express Company (NYSE:AXP) posted revenue of $15.3 billion, marking a 13.4% increase compared to the same quarter in the previous year. Additionally, the company's network volumes grew to $420 billion during the quarter, representing a 6.5% expansion from the corresponding period in the prior year.
As of the close of Q2 2023, 73 hedge funds in Insider Monkey’s database owned stakes in American Express Company (NYSE:AXP), compared with 77 in the previous quarter. The consolidated value of these stakes is over $28 billion.
Similar to Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and Apple Inc. (NASDAQ:AAPL), American Express Company (NYSE:AXP) remains one of Warren Buffett's best long-term stocks.