Investors from all walks of life idolize Warren Buffett for his stock-picking prowess. Buffett started investing in stocks when he was only 11, but he didn't become a billionaire until age 56, and there's been no looking back since. Buffett's net worth right now is around $97 billion.
Buffett has shown how investing in stocks for the long term can generate life-changing wealth. His company, Berkshire Hathaway, owns more than 50 stocks, most of which were first purchased several years ago. You too can build wealth if you start early, and buy and hold high-conviction stocks. Here are three such rock-solid Buffett stocks you can buy for as little as $1,000 and hold forever.
This transformation should pay off
First up is Johnson & Johnson (JNJ -0.36%). Buffett hasn't traded or spoken much about J&J over the years, but the fact that he first bought the healthcare stock almost 16 years ago and continues to own it bespeaks his conviction in the healthcare giant.
The easiest argument in favor of J&J stock amid market volatility is its clout in healthcare, which also makes it an attractive defensive stock. To put that into context, J&J has handily outperformed the market this year, and for all we know, this could just be the beginning as J&J transforms itself.
J&J plans to spin off its consumer health business into a separate publicly traded company within the next 18 to 24 months. That will leave it with two high-potential, fast-growing segments -- pharmaceuticals and medical devices.
In 2021, 52% of J&J's sales came from pharmaceuticals that include well-known drugs for complex diseases, while medical devices brought in 27% of its sales. The remaining sales came from consumer health which, despite including iconic brands like Neutrogena, Tylenol, and Listerine, is a cyclical business and has been a laggard on J&J's margins.
While J&J works toward its transformation, you can sit back and enjoy a 2.5% yield backed by steady and growing dividends. Buffett loves dividends, and J&J is a Dividend King that has hiked dividends every year for 60 consecutive years.
Buffett saw promise in this stock when no one else did
The second Buffet stock to buy -- and I've been pounding the table on this one for several months now -- is BYD (BYDDY -1.47%). The S&P 500 has shed almost 18% value so far this year, but BYD stock is up 19% so far. There's a reason why BYD is outperforming the market.
BYD has only recently caught Wall Street's attention, but Buffett spotted potential in the Chinese electric vehicle (EV) manufacturer as early as 2008. Today, China is the world's largest EV market, and BYD is a leader in the industry.
In fact, BYD sees so much potential in plug-in hybrids and all-electric vehicles that it stopped production of traditional internal combustion engine vehicles in March. BYD's sales more than doubled in May, and it now reportedly has a backlog of nearly 600,000 units, according to local Chinese media outlets. Between January and May alone, BYD sold more than 500,000 vehicles, close to the number it sold in 2021.
Aside from passenger cars, BYD also makes commercial vehicles, and even builds and sells them in the U.S. BYD is also one of the leading battery makers in China and has reportedly even struck a battery-supply deal with EV giant Tesla. Lithium is one of the hottest metals right now, so much so that BYD plans to buy several lithium mines in Africa to secure a long-term supply.
BYD is doing everything right in an industry with exponential growth potential, making it a no-brainer Buffett stock to own.
A no-brainer Buffett cash cow stock to buy
Visa (V -0.70%) is the third and one of the smartest Buffett stocks you could buy right now and own for as long as you possibly can.
Many expected Visa's growth to pause as consumers fall back on cash after relying on online purchases and digital payments over the past couple of years when the COVID-19 pandemic raged. However, digital payments continue to displace cash. Visa processed 7.9 billion more payments transactions across debit and credit cards but 16 million fewer cash transactions (including cash access, balance access, and balance transfer transactions) in its second quarter ended March 31.
Remember, the war on cash isn't a fad but a secular trend that Visa, the industry leader, is perfectly poised to ride. And here's something else that works in its favor: Visa is not a lender but only processes payments made using its co-branded cards in return for a fee.
Such a business model is not only asset-light but free from credit risks that most financial stocks typically face. And it's huge: Visa processed payments and cash transactions worth $13 trillion in 2021 and had nearly 3.7 billion cards issued worldwide. It's no surprise, then, that owning shares of a cash cow with solid margins in a growing industry has turned out to be so lucrative for long-term investors. It should continue to be lucrative for those who buy this Buffett stock that's still down about 14% in the past one year and trading at a price/earnings-to-growth (PEG) ratio of 1.39 times, considerably below its five-year average PEG.
