3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio
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Warren Buffett, the chief executive of Berkshire Hathaway Inc. (BRK.A – Get Report) , has long been lauded as one of the greatest value investors of this lifetime.
That makes his picks for Berkshire a solid pick for a retirement fund with a few years to grow. His preferences are smart for long-term retirement investors especially – after all, Buffett’s favorite holding period, he has said, is “forever.”
These are some of the best Berkshire- and Buffett-approved holdings to keep in your retirement portfolio if you’re looking for sustained returns over the long run.
American Express
American Express Co. (AXP – Get Report) first earned Buffett as an investor way back in the 1960s. Since then, Buffett’s Berkshire has amassed a 17.47% stake in the credit card company worth more than $14 billion. While it’s clear Buffett likes credit card firms – Berkshire also owns Mastercard Inc. (MA – Get Report) and Synchrony Financial Inc. (SYF – Get Report) – AmEx is especially savvy.
The company’s 1.3% dividend yield isn’t anything to write home about, but it boasts a strong management team and maintains one of the longest-dominating brands there is. Plus, American Express is a free cash flow generating machine, meaning it has plenty of cash left to pay investors dividends and buy back stock. In 2017, AmEx reported $12.48 billion in free cash flow, an increase of 82.2% from the previous year.
Coca-Cola
Coca-Cola Co. (KO – Get Report) has paid a dividend religiously since 1920 and has increased that dividend each year for the past 55 years, according to the company. It’s most recent dividend yield came in at a respectable 3.2% for 2017, and FactSet analysts predict that yield will grow to 3.6% for 2018, 3.8% for 2019 and 4.1% for 2020.
Buffett first invested in Coca-Cola in 1988, when the dividend was just 30 cents. That dividend today is 30% larger. In a letter to Berkshire shareholders the year he invested in Coke, Buffett said he intended to hold onto the stock “for a long time.”
Watch below what Coca-Cola CEO James Quincey just told TheStreet’s Executive Editor Brian Sozzi about Warren Buffett.
Apple
Apple Inc. (AAPL – Get Report) may not seem like it’s a made-for-retirement stock, but it could be worth taking another look. Sure, it’s a tech company, but it’s tough to imagine a world in which the majority of people don’t have an iPhone. Part of this company’s allure is that it’s essentially hooked a user base with staggering loyalty.
Plus, Buffett has said he sees Apple, not Amazon.com Inc. (AMZN – Get Report) or Alphabet Inc. (GOOGL – Get Report) , becoming the world’s first trillion-dollar company. At an $854 billion market cap, it’s not too far off.
Plus – though Apple isn’t known as a dividend company – its dividend yield is expected to grow to 2% by 2020 from 1.6% in 2017, according to FactSet. In addition, the stock has returned 20% over the last year, far outpacing the S&P 500’s 11% gain in the same time frame.
