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2 Best Warren Buffett Stocks to Buy for the Long Haul

2 Best Warren Buffett Stocks to Buy for the Long Haul


Warren Buffett, considered the greatest investor of all time, is a champion of long-term investing. It is therefore not surprising to see a number of attractive stocks passing through the portfolio of the company he runs, Berkshire Hathaway. For investors looking for inspiration, it’s a good idea to take an occasional look at Berkshire’s holdings.

Let’s look at two positions – one current and one former – that have entered Buffett’s portfolio several times and are worth considering today: Johnson & Johnson (NYSE:JNJ) And Apple (NASDAQ:AAPL).

1. Johnson & Johnson

Johnson & Johnson has already stood the test of time. THE healthcare giant has existed for over 100 years. Although no longer part of Buffett’s portfolio, the drugmaker still possesses many of the qualities that made it successful in the past.

First, he was incredibly picky with his leaders. Johnson & Johnson has had seven CEOs since it became a publicly traded company in 1944. A company’s management team is one of the most important factors in its success. The pharmaceutical company has always taken care to select qualified managers, generally in position for a long time. The current CEO, Joaquín Duato, officially took up this position in January 2022.

Second, J&J is a very innovative company. It continues to develop new and better drugs and medical devices. Johnson & Johnson’s pharmaceutical pipeline includes 94 active programs, some of which are brand new therapies. These often lead to new approvals, like that of Akeega, an anti-cancer drug that hit shelves for the first time this year.

Johnson & Johnson’s late-stage product pipeline includes products such as milvexian, a potential stroke prevention drug, and AAV-RPGR, a potential gene therapy for a rare eye disease. The company having recently spun off its consumer health unitit plans to devote even more funds to research and development in its pharmaceutical and medical device units, which should pay off in time.

Third, Johnson & Johnson has a strong footprint in the healthcare industry, which is highly regulated and difficult to manage. These and other factors should keep the company in business – and operating relatively well – for many years to come.

Of course, investors can’t ignore J&J’s incredible dividend history. The company has now increased its payouts for 61 consecutive years as a member of the elite Dividend Kings club. There aren’t many higher income stocks on the market, whether investors want to earn passive income or increase their returns over long periods of time by choosing to reinvest their dividends.

Johnson & Johnson’s current dividend yield of 3.07% is significantly higher than S&P500The average is 1.62%, while its 75% cash payout seems a bit high but should be manageable. Johnson & Johnson has had its fair share of legal issues that I believe the company will be able to resolve. Over the long term, the drugmaker remains in an excellent position to deliver stability, strong returns and competitive dividends.

There’s no way to know for sure, but perhaps these legal issues are part of the reason Berkshire Hathaway recently abandoned its position in the healthcare industry. However, Berkshire has already bought and sold the shares several times. Buffett has generally focused on the industries he knows best, and healthcare stocks have never been a significant part of his firm’s portfolio.

Still, because of its strong position in an industry that isn’t going away anytime soon, not to mention its incredible dividend program, Johnson & Johnson remains a top choice for long-term investors.

2. Apple

Apple has been one of Buffett’s favorite stocks for some time. The tech giant represents a significant percentage of Berkshire Hathaway’s portfolio. There are several factors that make Apple such a great stock for long-term investors. Despite selling electronic devices that are not necessary items and have many substitutes, Apple has made itself difficult to replace.

In addition to the company’s strong brand and high customer loyalty, Apple has a weakness for adding its ingenious touch to existing technologies, starting new trends and attracting customers. Additionally, the company offers a host of benefits to those who use its devices, including a range of entertainment services, many of which would have to be abandoned if they decided to abandon Apple. In other words, the company benefits from high switching costs.

Apple’s large installed base of more than 2 billion devices is arguably where its most lucrative long-term opportunities lie. The company will increasingly look to find new and better ways to monetize its customer base – the possibilities here are virtually endless. Apple is moving into healthcare, fintech and several other areas.

Additionally, Apple is also a great dividend stock. While it’s not a dividend king, it has increased its payouts by 120% over the past 10 years. Apple also has a proven track record of improving its revenue, profits, and cash flow.

2 Best Warren Buffett Stocks to Buy for the Long Haul

AAPL Revenue Table (Quarterly)

Even though the iPhone no longer gets the attention it once did, it remains the company’s main source of revenue as it continues to grow its high-margin services segment. Apple appears to have some of the tools needed to succeed in the next 10 years and beyond.

A strong economic moat, multiple avenues for growth and the ability to generate sufficient free cash flow to reinvest in its business. In short, investors can permanently keep this technology stock in their portfolios safely.

Should you invest $1,000 in Johnson & Johnson right now?

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Thrive Junior Bakina holds positions at Johnson & Johnson. The Motley Fool holds positions and recommends Apple and Berkshire Hathaway. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

2 Best Warren Buffett Stocks to Buy for the Long Term was originally published by The Motley Fool



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