Investors are getting cautious ahead of tech earnings this quarter, with the Nasdaq composite Index dropping nearly 5% over the past month. Amid surmounting geopolitical tensions and rising volatility ahead of the elections, investors have been pulling from U.S. equities. The CBOE Volatility Index has risen by over 37% over the past month.
Nonetheless, market fluctuations have not fazed billionaire investor and stock market guru Warren Buffett. With a net worth of over $130 billion, the Oracle of Omaha has been vocal about the prowess of the American economy.
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"In its brief 232 years of existence … there has been no incubator for unleashing human potential like America," Buffett remarked in an annual shareholder's letter. "Despite some severe interruptions, our country's economic progress has been breathtaking. Our unwavering conclusion: Never bet against America."
Furthermore, it is no surprise that Buffett is a big fan of stable, dividend-paying stocks. In fact, he has previously termed Coca-Cola and American Express as his "secret sauce," cashing out millions in dividends annually.
American Express
Among Buffett’s notable investments is American Express Company AXP, accounting for 10.3% of his total portfolio. The company’s substantial dividend payouts have significantly contributed to Berkshire Hathaway’s earnings over the years, amounting to a whopping $302 million as of 2022, and "seem highly likely to increase."
Interestingly, Buffett acquired his stake in American Express for $1.3 billion in 1995. By 2023, the annual earnings from this investment “considerably exceeded” the initial purchase cost. As of Dec. 31, 2022, Buffett’s stake in American Express was valued at approximately $22 billion.
Analysts expect American Express' revenues to increase 9.1% year-over-year to $65.99 billion in fiscal 2024. Furthermore, the company's EPS is expected to rise at a compound annual growth rate (CAGR) of 15.4% per annum over the next five years.
Buffett expects American Express's dividend payouts to rise by 16% in 2024.
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Coca-Cola
A cornerstone of Buffett’s dividend-rich portfolio is The Coca-Cola Company KO. Buffett’s $1.3 billion investment in Coca-Cola in 1994 has turned into an annual dividend windfall, yielding $704 million by 2022.
“Growth occurred every year, just as certain as birthdays,” Buffett stated in Berkshire Hathaway’s 2022 shareholder letter. “We expect that those checks are highly likely to grow.”
The capital appreciation of Berkshire Hathaway’s stake in Coca-Cola is staggering. By 2022, the investment’s value had soared to $25 billion, reflecting an impressive 1,800% increase.
"The lesson from Coke and Amex? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable," Buffett claimed in the 2023 annual shareholder's letter.
Chevron Corporation
Chevron Corporation CVX, one of the world's largest integrated energy companies, has been a key component of Buffett’s portfolio.
His stake in Chevron accounts for 5.3% of Berkshire Hathaway's total portfolio, valued at over $19 billion. In fact, Berkshire Hathaway was the largest owner of Chevron as of 2022 year-end.
Chevron currently pays $6.52 in dividends annually, yielding 4.09% on the current price. The company’s diversified operations, including its upstream and downstream activities, are expected to generate consistent earnings and cash flow.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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