Warren Buffett, the legendary investor, has shown a penchant for stocks over the years. However, like all brilliant minds in the investing world, he has his moments of skepticism. The stars have aligned for one of those spells recently.
The distinguished investor’s holding company, Berkshire Hathaway, engaged in a selling spree, parting ways with 11 stocks during the second quarter of 2024. Yet, amidst the flurry of sales, there emerges one standout pick that shines brightly for income investors.
Image source: The Motley Fool.
Stocks Departed by Buffett in Q2
Buffett’s significant divesture in Q2 included slashing nearly half of Berkshire Hathaway’s stake in Apple. Despite the sizable reduction, Apple retains its status as the largest holding in Berkshire’s portfolio.
Berkshire’s selling spree extended to the financial services sector, with reductions in holdings of Bank of America and a 21% sell-off in Capital One Financial.
The seasoned investor showed modest cuts in other positions such as Chevron, Liberty Media Class A, Liberty Media Class C, Floor & Decor, Louisiana-Pacific, and T-Mobile US. Notably, he completely exited stakes in Paramount Global and Snowflake.
Focus on Dividend Stocks
Income-oriented investors might not shed a tear for the departed stocks in Q2 without dividend payouts from Floor & Decor, Liberty Media, and Snowflake. Among others, Apple and Louisiana-Pacific offer meager forward dividend yields of 0.44% and 0.97%, respectively.
On the brighter side, Capital One Financial, T-Mobile US, and Paramount Global present more attractive options with yields standing at 1.63%, 1.73%, and 1.89%, respectively.
Although Buffett’s sentiment towards Bank of America may have waned, the banking giant boasts a solid forward dividend yield of 2.65%, recently elevating its dividend payout by 8%.
The Standout for Income Investors
Among the stocks liquidated by Buffett in Q2, there shines one beacon for income-focused investors. Chevron flaunts an enticing forward dividend yield of 4.58% and a history of consistent dividend increments spanning 37 years.
Chevron stands to benefit from several potential catalysts in the near future. Lower interest rates could spur economic growth in the U.S., boosting oil and gas consumption. Additionally, geopolitical tensions in the Middle East may support oil prices. Looking ahead, Chevron’s pending acquisition of Hess faces an arbitration panel challenge lodged by ExxonMobil, with Chevron’s CEO expressing optimism about a favorable resolution in the next year.
Furthermore, Chevron’s acquisition of Hess is anticipated to broaden its oil and gas assets’ portfolio, enhancing cash flow and dividend payouts for shareholders. With a strong focus on pioneering carbon capture and storage technology, Chevron’s long-term prospects appear promising amid the global shift towards renewable energy.
Despite his paring down of shares in Q2, Buffett’s continued interest in Chevron resonates through its position among Berkshire’s top holdings. This high-yield dividend stock beckons income investors with its lucrative prospects.