Warren Buffett’s New 13F Is Out And He’s Leaning On These Big 3 Holdings To Fight Searing Inflation

Warren Buffett’s New 13F Is Out And He’s Leaning On These Big 3 Holdings To Fight Searing Inflation

Price levels are on the rise. In October, US consumer prices rose 7.7% from a year ago, down from 9.1% in June, but still at worrying levels.

Spiking inflation has serious consequences for your cash savings.

Luckily, investment legend Warren Buffett has plenty of advice on what to own when consumer prices rise.

In a 1981 letter to shareholders, Buffett highlighted two business characteristics investors should look for when trying to fight inflation: 1) the power to easily raise prices, and 2) the ability to do more business without having to overspend.

Here are four Berkshire businesses that largely boast of these characteristics.

Not to be missed

American Express (AXP)

Last year, American Express demonstrated its pricing power by raising the annual fee on its Platinum card from $550 to $695.

The company will also directly benefit from an inflationary environment.

American Express makes most of its money through discount fees: merchants are charged a percentage of every Amex card transaction. As the price of goods and services increases, the business gets a cut on the largest bills.

Business is booming. In the third quarter, the company’s revenue increased 24% year over year to $13.6 billion.

American Express is Berkshire Hathaway’s fifth largest holding company. Owning 151.6 million shares of AXP, Berkshire’s stake is worth about $23.2 billion.

Berkshire also owns shares in American Express competitors Visa and Mastercard, though the holdings are much smaller.

American Express stock currently offers a dividend yield of 1.4%.

Coca-Cola (KO)

Coca-Cola is a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is within the reach of most people.

The company’s deep-rooted market position, enormous scale, and portfolio of iconic brands, including names like Sprite, Fresca, Dasani, and Smartwater, give it broad pricing power.

Read more: You’re probably overpaying when you shop online — get this free tool before Black Friday

Add in solid geographic diversification—its products are sold in more than 200 countries and territories around the world—and it’s clear that Coca-Cola can thrive through thick and thin. After all, the company went public more than 100 years ago.

Buffett has held Coca-Cola in his portfolio since the late 1980s. Today, Berkshire owns 400 million shares of the company, valued at approximately $24.1 billion.

You can lock in a 2.9% dividend yield on Coca-Cola stock at current prices.

Apple (AAPL)

No one spending $1,600 on a fully decked out iPhone 14 Pro Max would call that a bargain. But consumers still love to splurge on Apple products.

Earlier this year, management revealed that the company’s active installed base of hardware has surpassed 1.8 billion devices.

While competitors offer cheaper devices, millions of users don’t want to live outside the Apple ecosystem. The ecosystem serves as an economic moat, allowing the company to earn outsized profits.

It also means that when inflation rises, Apple can pass on higher costs to its global consumer base without worrying too much about a decline in sales volume.

Today, Apple is Buffett’s largest publicly traded holding, accounting for nearly 40% of Berkshire’s portfolio by market value. Of course, the huge increase in Apple’s stock price is one reason for that concentration. Over the past five years, shares of the tech gorilla are up more than 250%.

Apple currently offers a dividend yield of 0.6%.

Chevrons (CVX)

One of Buffett’s big moves in 2022 is uploading to Chevron. According to an SEC filing, Berkshire owned $23.8 billion of the energy giant as of Sept. 30, a significant jump from its $4.5 billion stake at the end of 2021.

Today Chevron is Berkshire’s third largest public holding company.

It’s not hard to see why. Even though the oil business is capital intensive, it tends to do very well during times of high inflation.

Oil, the most traded commodity globally, is up 16% year-to-date. And the supply shock caused by the Russian invasion of Ukraine could keep up that trend.

Strong oil prices benefit oil producers. Chevron’s latest quarterly earnings increased 84% year over year. The stock is up more than 50% in 2022.

The company also returns money to investors. Paying quarterly dividends of $1.42 per share, Chevron has an annual yield of 3.0%.

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This article provides information only and should not be construed as advice. Comes without warranty of any kind.

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