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Secrets of Great Long-Term Stock Investors

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  • (0:45) - Value Invest Like A Pro: Top Tips For Long Term Investing
  • (9:40) - What Are Warren Buffett’s Big Wins?
  • (30:30) - Episode Roundup: MRK, KO, COKE, AXP, CVX, VOO           
  •             Podcast@Zacks.com

 

Welcome to Episode #319 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

Berkshire Hathaway’s 2022 Annual Letter is out and Warren Buffet included some of his infamous investing wisdom within it.

He writes that the lesson for investors is: “The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders.”

Berkshire Hathaway bought Coca-Cola (KO - Free Report) in 1994 and American Express (AXP - Free Report) in 1995. It still owns big positions in both stocks. The annual letter says that Coke paid Berkshire $75 million in dividends in 1994 and by 2022 it was paying $704 million. That’s the power of patience, discipline and compounding over the course of 28 years.

What can the rest of us learn from great investor’s long-term stock trades?

5 Stocks for Long-Term Investors

1.       Merck & Co., Inc. (MRK - Free Report)

In 1950, Anne Scheiber, considered one of the most successful retail investors ever, bought 1,000 shares of Schering-Plough for $10,000. She held it for 45 years until her death in 1995. After 45 years, the shares were worth $7.2 million, with dividends reinvested. Schering-Plough was bought by Merck in 2009.

Merck still pays a dividend. It is currently yielding 2.75%.

Should Merck be on your short list?

2.       Coca-Cola Inc. (KO - Free Report)

Coca-Cola has paid a dividend for 60 consecutive years. Not only that, it has actually raised it every year during that time. It’s a true dividend aristocrat.

But shares of Coca-Cola have lagged the S&P 500 since Buffett bought it. It’s up just over 400% since Aug 31, 1994 while the S&P 500 was up 734% during that same time.

Should you sacrifice performance for Coca-Cola’s dividend?

3.       Coca-Cola Consolidated, Inc. (COKE - Free Report)

What if Buffett had bought the Coca-Cola bottler, instead of the beverage company, in 1994? Coca-Cola Consolidated pays a dividend too, but it’s only yielding 0.4% in 2023.

But shares of Coca-Cola Consolidated have outperformed in that time. $10,000 invested in Coca-Cola Consolidated would have been $304,464 by Mar 1, 2023. Shares were up 2,952% during that time.

Should you look beyond the well-known big cap names with a company like Coca-Cola Consolidated?

4.       American Express (AXP - Free Report)

American Express has been a staple in Buffett’s portfolio since 1995. It paid Berkshire $41 million in dividends that first year but in 2022 it paid $302 million.

American Express is currently yielding 1.2%.

Shares of American Express have outperformed the S&P 500 since 1995. Shares are up 1,359% since Dec 29, 1995 compared to the S&P 500 which was up 556% in that same period.

Should American Express be on your short list?

5.       Chevron Corp. (CVX - Free Report)

Chevron has only recently been added to the Berkshire Hathaway portfolio so it doesn’t have a 28-year track record in the portfolio like Coke does. But it does also have an outstanding dividend paying track record. Coincidence? Chevron has raised it’s dividend 36 consecutive years.

In Jan 2023, Chevron raised its quarterly dividend again, raising it 6%, or $0.09, to $1.51. It currently yields 3.8%.

Should long-term investors consider buying Chevron?

What Else Do You Need to Know About How to Be a Great Long-Term Investor?  

Listen to this week’s podcast to find out.

 

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