In this article, we discuss 10 stocks to buy and hold for decades according to Warren Buffett. If you want to skip our detailed discussion of Buffett’s investment philosophy, click 5 Stocks to Buy and Hold for Decades According to Warren Buffett.
Legendary investor Warren Buffett is regarded as perhaps the most skilled global financier and hedge fund manager, and as one of the richest men in the world, his money managing techniques are revered by investors and fellow portfolio managers. Berkshire Hathaway portfolio is concentrated in quality stocks and he is known to never follow the crowd blindly.
Warren Buffett’s Investment Philosophy
Buffett does not conform to short-term market trends and never follow baseless hype. For example, he was safe from the GameStop Corp. (NYSE:GME) short squeeze in January 2021, which incurred huge losses for hedge fund managers like Steve Cohen and Gabriel Plotkin, and several short sellers. Similarly, several electric vehicle stocks soared in 2021 on hype alone, rather than actual sales generated and units delivered to customers. Buffett, on the other hand, is a long-time stakeholder of the Chinese EV maker, BYD Company Limited (OTC:BYDDY). In 2008, he invested about $232 million in the company, which incurred gains of $2 billion for Berkshire in 2021 alone.
Keeping the current Russia-Ukraine crisis in mind, Buffett took advantage of the energy crisis and soaring prices of oil, prudently buying millions of shares of Occidental Petroleum Corporation (NYSE:OXY). His stake in the energy company as of March 17 is worth nearly $7 billion. If this Warren Buffett bet pays off, Occidental Petroleum Corporation (NYSE:OXY) will be yet another dividend contributor in the billionaire’s portfolio.
Some of the most notable stocks in Warren Buffett’s $331 billion Q4 portfolio include Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and Amazon.com, Inc. (NASDAQ:AMZN), among others discussed in detail below.
Our Methodology
We used the Q4 2021 portfolio of Warren Buffett’s Berkshire Hathaway for this analysis, selecting the securities that the billionaire has held a position in for more than a decade.
Stocks to Buy and Hold for Decades According to Warren Buffett
10. DaVita Inc. (NYSE:DVA)
Number of Hedge Fund Holders: 32
DaVita Inc. (NYSE:DVA) treats patients with chronic kidney failure by operating a network of kidney dialysis centers and providing related laboratory services. The company was incorporated in 1994 and is headquartered in Denver, Colorado.
DaVita Inc. (NYSE:DVA) has featured on Warren Buffett’s portfolio since Q4 2011. In the fourth quarter of 2021, Buffett owned more than 36 million DaVita Inc. (NYSE:DVA) shares, worth $4.10 billion, accounting for 1.24% of the total investments of the period.
In its Q4 earnings report, published on February 10, DaVita Inc. (NYSE:DVA) posted an EPS of $2.02, above consensus estimates by $0.22. The company’s revenue for the quarter was $2.94 billion, surpassing market predictions by approximately $30 million.
On January 5, Truist analyst David MacDonald raised the price target on DaVita Inc. (NYSE:DVA) to $125 from $114 and kept a Hold rating on the shares as part of a broader research note on Healthcare Services. The analyst noted that strong financial flexibility across much of the sector will drive strategic mergers and acquisitions activity, and he regards valuation and risk/rewards for the group as “attractive”.
A total of 32 hedge funds were bullish on DaVita Inc. (NYSE:DVA) at the end of December 2021, compared to 39 funds in the quarter earlier. Gates Capital Management is a significant shareholder of the company, with 1.60 million shares worth over $182 million.
In addition to Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and Amazon.com, Inc. (NASDAQ:AMZN), elite hedge funds are pouring into DaVita Inc. (NYSE:DVA).
9. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 46
Warren Buffett has been a long-time shareholder of U.S. Bancorp (NYSE:USB), purchasing a stake in the company in the last quarter of 2010. He gradually increased his position in U.S. Bancorp (NYSE:USB) over the years, and according to Q4 securities filings, Buffett owns 126.4 million shares of the company, worth $7.10 billion, representing 2.14% of the total portfolio. U.S. Bancorp (NYSE:USB) is a financial services holding company, providing banking, investment management, and corporate support.
On February 14, Jefferies analyst Ken Usdin downgraded U.S. Bancorp (NYSE:USB) to Hold from Buy with a price target of $64, down from $66, and his adjusted model for earnings now includes five rate hikes through 2023 versus two that he accounted for previously. The analyst told investors that higher rates at U.S. Bancorp (NYSE:USB) offer reduced upside to the shares, as historically there are fewer buybacks compared to most peers, as well as slower payments growth in this environment.
U.S. Bancorp (NYSE:USB) on March 15 declared a $0.46 per share quarterly dividend, in line with previous. The dividend will be paid on April 15, to shareholders of record on March 15.
Among the hedge funds tracked by Insider Monkey, First Eagle Investment Management is a prominent shareholder of U.S. Bancorp (NYSE:USB), with 9.45 million shares worth $531.2 million. Overall, 46 hedge funds were bullish on the stock at the end of the December quarter.
Here is what Mairs & Power has to say about U.S. Bancorp (NYSE:USB) in their Q4 2020 investor letter:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
8. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 58
Moody’s Corporation (NYSE:MCO) is a bond credit rating company that provides assessment services on multiple debt obligations, in addition to publishing credit ratings. Warren Buffett has held a position in Moody’s Corporation (NYSE:MCO) since the fourth quarter of 2010. In the 13F filings for Q4 2021, Buffett’s fund revealed that it owned 24.6 million Moody’s Corporation (NYSE:MCO) shares, worth $9.6 billion, representing 2.91% of the total Q4 investments.
On February 10, Moody’s Corporation (NYSE:MCO) declared a $0.70 per share quarterly dividend, a 12.9% increase from its prior dividend of $0.62. The dividend is payable on March 18, to shareholders of record on February 25.
Moody’s Corporation (NYSE:MCO) stock declined 4.6% on March 10 after the company published underwhelming guidance for Q1 given the falling rates, with adjusted earnings trailing the average analyst estimate. Moody’s Corporation (NYSE:MCO) announced Q1 adjusted EPS guidance of $2.50-$3.00, below the market consensus of $3.37. However, the company reassured investors of its medium-term goal for revenue growth of at least 10% and adjusted EPS growth in low double digits.
Credit Suisse analyst Kevin McVeigh lowered the price target on Moody’s Corporation (NYSE:MCO) to $395 from $415 and kept an Outperform rating on the shares on March 11. The analyst advised traders with a long-term investment horizon to use recent weakness to buy Moody’s Corporation (NYSE:MCO) stock, noting that issuance disruption caused by the Ukraine crisis doesn’t affect his thesis.
According to the fourth quarter database of Insider Monkey, 58 hedge funds were bullish on Moody’s Corporation (NYSE:MCO), with collective stakes amounting to $16.85 billion. TCI Fund Management is a significant shareholder of the company, with 6.5 million shares worth $2.5 billion.
Here is what Qualivian Investment Partners has to say about Moody’s Corporation (NYSE:MCO) in its Q2 2021 investor letter:
“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional ratings business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
The Procter & Gamble Company (NYSE:PG) is a multinational manufacturer and marketer of consumer packaged products. The company has featured on the 13F portfolio of Warren Buffett’s Berkshire Hathaway since more than a decade, although the billionaire trimmed his stake over the years. As of Q4 2021, Buffett owns 315,400 shares of The Procter & Gamble Company (NYSE:PG), worth $51.5 million.
On March 15, the consumer staples stocks gained as oil prices remained in a downtrend and core PPI clocked in below expectations. The Procter & Gamble Company (NYSE:PG), a prominent dividend paying entity in the sector, gained 3.1%, topping peers in the market.
Deutsche Bank analyst Steve Powers on March 16 lowered the price target on The Procter & Gamble Company (NYSE:PG) to $173 from $179 and kept a Buy rating on the shares after meeting with the company management, who displayed confidence despite short-term market volatility and latest headwinds.
According to Insider Monkey’s Q4 data, 67 hedge funds held long positions in The Procter & Gamble Company (NYSE:PG), compared to 69 funds in the previous quarter. Rajiv Jain’s GQG Partners held the biggest stake in the company, with 7.5 million shares worth $1.2 billion.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 70
The Coca-Cola Company (NYSE:KO), a multinational producer of alcoholic and nonalcoholic beverages, has been a long-term bet of Warren Buffett, featuring on his portfolio since Q4 2010. The securities filings for the fourth quarter of 2021 reveal that Buffett’s fund owns 400 million shares of The Coca-Cola Company (NYSE:KO), worth $23.6 billion, representing 7.15% of the total securities.
Based on its positive outlook, The Coca-Cola Company (NYSE:KO) announced on March 17 its plans to resume share repurchases in 2022, with net share repurchases of approximately $500 million for the year. In addition to that, The Coca-Cola Company (NYSE:KO) approved its 60th consecutive annual dividend increase, raising the quarterly dividend approximately 5% from $0.42 to $0.44 per share. The dividend is payable on April 1, to shareholders of record as of March 15.
In Q4 2021, 70 hedge funds held long positions in The Coca-Cola Company (NYSE:KO), up from 61 funds in the earlier quarter. Citadel Investment Group is a prominent shareholder of the company, with 10.6 million shares worth $632.6 million.
The Coca-Cola Company (NYSE:KO) is gaining traction among institutional investors, just like Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and Amazon.com, Inc. (NASDAQ:AMZN).
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Disclosure: None. 10 Stocks to Buy and Hold for Decades According to Warren Buffett is originally published on Insider Monkey.
