SA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e mai!
Matt at mkrantz"usatoday.#om. $% &'y is &arren (uffett su#' a revered investor) A% *nvestors !ove #onsisten#y. T'at+s not ,ust t'e #ase wit' sto#ks and #ompanies, but wit' money mana-ers, too. &arren (uffett+s bi- #!aim to fame is 'is !on- term tra#k re#ord. (uffett 'as been in t'e investin- -ame a very !on- time and 'as so!id !on- term performan#e to s'ow for it. S'ares of (erks'ire .at'away+s #!ass ( s'ares are up more t'an /001 sin#e t'e be-innin- of 2334, 'andi!y toppin- t'e near!y 2501 in#rease of t'e Standard 6 7oor+s 500 sin#e t'at time 8e9#!udin- dividends:. *nvestors are a!so attra#ted by (uffett+s simp!e sto#k se!e#tion -uide, based on studyint'e fundamenta!s of #ompanies. (uffett+s annua! reports to s'are'o!ders 'ave be#ome must reads for investors. T;A<K YO=; STO<KS% >et rea! time quotes wit' our free 7ortfo!io Tra#ker ?ust be#ause (uffett is so respe#ted, t'ou-', doesn+t mean you s'ou!d invest in (erks'ire. @ot ne#essari!y. As t'e #ompany -ets bi--er, it needs !ar-er investments to make a differen#e. S'ares of (erks'ire .at'away 'ave !a--ed t'e S67 500 over t'e past five years, risin- A51, s'ort of t'e 2001 -ain of t'e S67 500. Additiona!!y, t'e S67 500 pays a rou-'!y B1 annua! dividend, w'i!e (erks'ire .at'away pays no dividend. Additiona!!y, t'ere are #on#erns over 'ow we!! (erks'ire wi!! perform on#e (uffett -ives up t'e !eaders'ip of t'e #ompany. (uffett, A/, 'as said t'e #ompany 'as su##ession p!ans in p!a#e. (ut t'ere+s on!y one &arren (uffett. Sun#or Cner-y 8S=:, Derisi-n 8D;S@:, C99on Mobi! 8EOM:, =S (an#orp 8=S(:, T'e (ank of @ew York Me!!on <orporation 8(K: and DaDita, *n# 8DDA:. *ts portfo!io is 'eavy on t'ose industries t'at offer #ompanies to -enerate bot' top and bottom !ine -rowt', but is we!! diversified, main!y fo#used on finan#ia! 8/0.21:, #onsumer -oods 8BB.A1:, te#'no!o-y 82F.41: and servi#es 84.G1: #ompanies. *ts bi--est investments in#!ude some of t'e most popu!ar b!ue #'ips known to &a!! Street. .ere+s a !ook at (erks'ire+s top ei-'t sto#ks. Stock Wells Fargo & Com an! Coca"Cola Com an! #nternationa l $usiness %achine Shares Held /FG,2G2,FBG /00,000,000 FA,2B2,3A/ Percent of Portfolio B0.43 23.B5 2G.42 Rank 2 B G Dividend Yield B.531 B.421 B.0/1 The Annual Dividend H2.B0 H2.2B HG.A
American &' ress Com an! P( Wal"%art
252,F20,400
2B.//
2.0G1
H0.3B
5B,43G,04A /3,B/4,BG5
/.4F G.34 G.45 G.2/
5 F 4 A
B.431 B.BF1 B.531 B.2A1
HB./0F H2.AA HB.5B H0.3B
&''on %o)il /0,0A3,G42 Cor *S $ancor 43,224,502
&'a!e&isdom.#om T'ese top pi#ks are safe for investors and offer 'ea!t'y returns. (e!ow, * dis#uss (uffet+s top two pi#ks t'e two * !ike t'e most for dividend investors. T'ese are <o#a <o!a 8KO: <ompany and 7ro#ter 6 >amb!e 87>:. * stron-!y be!ieve t'at t'ese two sto#ks 'ave t'e abi!ity to sustain returns for investors. Ho+ Coca"Cola is a Safe #nvestment <o#a <o!a is -eneratin- stron- resu!ts wit'in t'e #onfines of a #'a!!en-inma#roe#onomi# environment driven main!y by risin- vo!ati!ity a#ross emer-in- markets. T'e #ompany is -rowin- its -!oba! vo!ume and #ontinues to e9pand wor!dwide va!ue s'are in tota! nona!#o'o!i#, ready to drink bevera-es due to t'e stren-t' of its portfo!io, t'e diversity of its -!oba! footprint and fo#us on marketp!a#e e9e#ution. To-et'er wit' its -!oba! bott!in- partners, it is investin- in its brands and #apabi!ities to stren-t'en its system and to drive sustainab!e -rowt' and va!ue. &it' t'is strate-y, <o#a <o!a 'as been s'owin- si-nifi#ant returns to investors in t'e form of dividends, buyba#k and pri#e appre#iation. T'e #ompany 'as #onsistent!y in#reased its dividend over t'e past few de#ades. At t'e moment, its payout ratio of 5F1 is not on!y sustainab!e, but a!so offers room for future in#reases. Iurt'er, its stron- top and bottom !ine enab!es it to -enerate si-nifi#ant #as' f!ows and its very 'i-' pri#e to #as' f!ow ratio of 24./ demonstrates a simi!ar trend. *n t'e TTM, its operatin- #as' f!ows are standin- at H20.5 bi!!ion, and free #as' f!ows are at HA./ bi!!on. T'e #ompany+s dividend payments are on!y at H/.4 bi!!ion, and are #omp!ete!y prote#ted by free #as' f!ows. &it' su#' a massive amount of free #as' f!ows, <o#a <o!a is a!so workin- to redu#e s'are #ount, w'i#' is a furt'er en'an#in- dividend payment. Ho+ Procter & (am)le is a Safe #nvestment
