If you are looking for investment ideas, what better place to start than with Warren Buffett, one of the most famous investors of modern times? Dubbed the Oracle of Omaha because of his investment success over time, the CEO of Berkshire Hathaway currently has investments in Chevron (CVX 0.01%), Visa (V -0.70%), and Coca-Cola (KO -0.19%). All three are worth looking at in December.
Chevron is ready for the next downturn
Chevron is an integrated energy giant with operations across the industry, from the upstream (energy production), through the midstream (pipelines), and into the downstream (chemicals and refining). This diversification helps to soften the peaks and valleys inherent in this highly volatile, commodity-driven sector.
In addition, Chevron has long focused on having a rock-solid balance sheet, with a current debt-to-equity ratio of around 0.17 times. That's one of the lowest levels of leverage among the company's closest peer group.
Put simply, Chevron is ready for the next oil downturn. When it comes, the company will take on debt, leaning on its balance sheet so it can continue funding its business while also supporting its dividend. As the energy sector recovers, it will reduce leverage.
That's the game plan management has used for years and how the company has amassed over three decades' worth of annual dividend increases despite operating in a highly volatile sector. With an attractive dividend yield of around 4% today, Chevron is a great addition for dividend investors seeking to add some energy exposure to their portfolio.
Visa is at all-time highs and still looks reasonably priced
Visa is one of the largest payment processing companies in the world. It has long benefited from the transition away from cash and toward card-based payments. Helping that along has been the increase in online shopping, where cash isn't even a choice.
Although Visa charges only a small fee for each transaction, it has processed over 233.8 billion transactions in fiscal 2024. Those small charges add up to big numbers, and they are growing, with processed transactions up 10% year over year in fiscal 2024. It seems highly likely that the upward trend will continue.
What's interesting is that Wall Street has pushed Visa's stock price toward all-time highs. But, at the same time, its price-to-sales ratio and price-to-earnings ratio are both close to their five-year averages.
The dividend yield, while tiny at 0.75%, is actually fairly attractive for Visa, historically speaking. In other words, this well-positioned growth stock seems like it is reasonably priced. That's worth your attention right now if you have a growth focus, noting that Buffett's approach is basically to pay a fair price for great companies.
Coca-Cola is a Dividend King
Coca-Cola probably doesn't need much of an introduction, given that its name is one of the most recognized in the world. It is a beverage giant with a portfolio of dominant brands, a far-reaching distribution system, a powerful marketing team, innovation strength, and the size and financial wherewithal to acquire smaller competitors (when it will add to growth).
That's a combination of attributes that few of its competitors possess. And it is what has driven over 50 years of annual dividend increases, which have propelled Coca-Cola onto the highly elite Dividend Kings list.
A long time holding of Warren Buffett, it is often afforded a premium price on Wall Street. But what's interesting right now is that Coca-Cola's stock price has come down to the point where its price-to-sales and price-to-earnings ratios are roughly in line with their five-year averages. That suggests the stock is fairly priced, just like Visa.
Add in the incredible dividend history and a 3% dividend yield -- more than twice what the S&P 500 index offers -- and Coca-Cola looks like it is worth adding to your portfolio today if you are an income investor.
Buffett is all about buying and holding
Chevron, Visa, and Coca-Cola all look like attractive stocks right now. But it is important to remember that Buffett isn't a stock trader, he's a long-term investor. He usually buys companies and holds, allowing the business growth of his investments over time to benefit him financially.
If you are looking at these three stocks, go in with the expectation of following his buy-and-hold lead. If you do that, you'll likely end up pleased with the outcome with this trio of iconic companies.
