The Strategist

3 companies from Warren Buffett’s portfolio that are worth attention


02/20/2019 - 11:03



Warren Buffett continues to delay launch of a dividend payout program for Berkshire Hathaway. But there is no doubt that the legendary investor loves dividends. In his letter to shareholders, Buffett noted that over the past year, Berkshire has received a tremendous amount of payments in the amount of $ 3.7 billion.



freeimage4life via flickr
freeimage4life via flickr
Most companies in which the Oracle of Omaha invests pay dividends. Below are three firms from the the entrepreneur’s portfolio that certainly deserve attention.

1. APPLE

Warren Buffett has never been a fan of technology companies, but Apple melted his heart. At the moment, papers of Apple occupy the largest share in the investment portfolio of Berkshire Hathaway.

Currently, Apple's dividend yield is 1.72%. Since 2012, the company's payments have almost doubled. In the foreseeable future, the company is unlikely to have any problems with respect to dividends, because the payout ratio is very low (only 23%), and the company has more than $ 86 billion in accounts.

Despite the fact that in early January the manufacturer lowered its revenue forecast for the first fiscal quarter of 2019 amid weak iPhone sales in China, after which the company's shares fell by 9%, Buffett maintains a positive attitude towards the company's future.

2. JOHNSON & JOHNSON

For a long time Johnson & Johnson shares made up a large part of the Berkshire investment portfolio. However, Buffett sold most of the securities in 2012. Since that time, the total profitability of the company was more than 140%.

Dividend payments are what attract the majority of investors in the company. Johnson & Johnson has been paying dividends every quarter for 56 consecutive years. Currently, the yield is 2.72%.

Last year, the company had to face difficulties. In the autumn, a scandal arose because of a large amount of clients' claims due to traces of asbestos found in powder and other talcum powder products. As a result, the manufacturer’s shares fell by 10% during one trading session. The company's growth has also slowed significantly due to a decrease in sales of Remicade drug for the treatment of rheumatoid arthritis, as strong competitors appeared on the market, producing cheaper biosimilar versions of the drug.

But in spite of all the difficulties, long-term investors can still pay attention to Johnson & Johnson. Head of the company, Alex Gorsky, notes: “The strong cash flow that the company generates allows for the simultaneous return of value to shareholders in the form of regular quarterly dividends and share repurchases, and also uses capital to stimulate long-term growth.

3. STORE CAPITAL

Berkshire Hathaway owns only one real estate investment trust (or REIT), and this is Store Capital. The company owns more than two thousand objects in the United States, which house shops, restaurants, cinemas, fitness centers, medical and educational institutions, manufacturing facilities, and so on, with 99.7% of the space leased. Currently, the dividend yield of Store Capital is more than 4%.

Although many retailers are experiencing difficulties due to the growth of e-commerce, Store Capital tenants generally feel pretty good. REIT's customer base includes many companies that are not so sensitive to online competition, such as restaurants, cinemas and health clubs. Store Capital continues to increase profits and dividends, which is exactly what Buffett values most in companies.

source: ft.com




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