Since taking over as CEO at Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) in 1965, Warren Buffett has delivered investors a return of 20% compounded annually. In other words, if you invested $1,000 in the company when Buffett took over, you would have nearly $3.8 million today.
Buffett's strong track record is why his investment decisions draw a lot of attention. Most investors probably know that Apple stock is a significant portion of Berkshire Hathaway's portfolio. The conglomerate owns nearly $178 billion worth of the tech giant's shares, which make up roughly 50% of its total portfolio.
The other half of Berkshire's portfolio comprises 47 stocks, but only five of them make up 66% of that other half. Here's what they are.
Berkshire has $56 billion invested in two financial stocks
After Apple, Bank of America(NYSE: BAC) and American Express(NYSE: AXP) are Buffett's next two largest holdings, valued at $29.6 billion and $26.4 billion, respectively, at the end of the second quarter.
With over $2.4 trillion in total assets, Bank of America is the second-largest bank in the U.S., behind only JPMorgan Chase. BofA's strength comes from its sheer size and recognizable brand.
Bank stocks have taken a hit after the failure of SVB Financial's Silicon Valley Bank and First Republic Bank earlier this year. However, Bank of America has held up well, growing revenue and income by double digits and increasing the number of checking accounts for the 18th consecutive quarter.
American Express operates the third-largest credit card network in the world, trailing only Visa and Mastercard. Amex stands out because of its premium customer base and strong brand associated with luxury. Buffett loves companies with recognizable brands because it helps them maintain their economic moat over rivals. In an interview with Bloomberg, Buffett said:
You can't create another American Express. I could create another shoe store. I could create another business publication. I could do all kinds of things with hundreds of billions of dollars, but I can't put in the minds of people what is in their minds about American Express.
This consumer staple is a longtime Berkshire holding
Berkshire's next largest holding, at $24 billion, is Coca-Cola(NYSE: KO), which has been in the company's portfolio since 1988. Like American Express, Coca-Cola's brand is iconic. At $57 billion, it is the seventh-most valuable brand globally in Interbrands' 2022 rankings, the highest food or beverage name on the list.
Coca-Cola has been a stellar income stock that has raised its dividend payout annually for 62 consecutive years. Berkshire will earn $736 million in dividends from the stock this year, giving it a 56.6% yield based on its initial cost.
Berkshire has another $32.5 billion invested in these two energy giants
Lastly, Buffett and his team have been adding heavily to his energy holdings over the past few years. At $19.3 billion, Chevron(NYSE: CVX) is Berkshire's fifth-largest position.
Chevron operates a balanced business in the world of oil and gas. It has both upstream and downstream operations, making it less vulnerable to oil price fluctuations, and is a good source of cash flow and dividends.
For 37 consecutive years, Chevron has raised its dividend payout. The company has also benefited from higher oil prices in recent years, which have boosted its top and bottom lines, allowing it to pay juicy dividends and repurchase shares.
Another energy stock Berkshire has added in the past few years is Occidental Petroleum(NYSE: OXY). In 2019, Berkshire Hathaway provided special financing to Occidental to help it purchase Anadarko. It has continued to add shares and now owns $13.2 billion of them, a 24% stake in the company.
The company has benefited from higher oil prices and used its profits to pay down debt and invest in green energy, which it believes could one day be a market worth $3 trillion to $5 trillion.
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American Express is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. SVB Financial provides credit and banking services to The Motley Fool. Courtney Carlsen has positions in Apple, Chevron, and Occidental Petroleum. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, JPMorgan Chase, Mastercard, and Visa. The Motley Fool recommends Chevron and recommends the following options: long January 2024 $47.50 calls on Coca-Cola, long January 2025 $370 calls on Mastercard, and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.