Buffett

The legendary investor Warren Buffett is famous for buying quality businesses with durable competitive advantages. Just take a look at one of his most famous holdings: Coca-Cola. Few businesses in the world have Coke’s name brand recognition, or its level of customer loyalty.

One of the best ways to gauge whether a business has a durable economic moat is to look at its margins. Is the company in question far more profitable than its competitors? And has it maintained these elevated margins for years at a time? If so, then that business looks like a potential addition to Buffett’s personal portfolio.

Right now, there’s one chipmaker that is likely getting Buffett’s attention. The margins for this business are simply off the charts.

Warren Buffett probably loves this AI company

Few companies in the world are benefiting as much from the artificial intelligence revolution as chipmaker Nvidia (NVDA -0.01%). At its core, Nvidia is a chip stock. It manufactures hardware that allows modern computing technologies to function. Artificial intelligence is no exception. That industry requires massive numbers of chips to train, launch, and execute its models.

Due to early investment, Nvidia is the largest chipmaker in the world when it comes to delivering chips designed for the AI industry. Many estimates peg it at a market share of 90% or more. Overall, Nvidia’s chips are generally considered superior in various key performance metrics. But it’s really Nvidia’s software platform that creates most of the magic. Developed way back in 2004 and later released in 2007, Nvidia’s CUDA platform — which stands for Compute Unified Device Architecture — allows customers to customize its chips with parallel computing capabilities that tailor its performance specifications to exactly what that customer needs.

NVDA Gross Profit Margin (Quarterly) data by YCharts.

The result of CUDA’s introduction was twofold. First, Nvidia’s chips could be customized to extract greater performance than competing chips. Second, customers became embedded within Nvidia’s hardware and software flywheel. If customers wanted to switch to another chipmaker’s products, they would need to alter both their hardware and software systems — creating critical friction points that keep these customers within Nvidia’s ecosystem for the long term.

The end result is superior gross margins for Nvidia versus competitors like Intel and AMD. And while profitability has dipped in recent quarters due to trade restrictions in China and onetime manufacturing costs for its new Blackwell chips, Nvidia’s gross margins remain roughly double other chipmakers like Intel and AMD. Nvidia executives expect gross margins to move above the 70% mark again by the end of the year as these near-term headwinds abate.

Image source: Getty Images.

Is it time to load up on Nvidia stock?

In many ways, Nvidia is very similar to Apple. Years ago, analysts were worried about Apple’s elevated gross margins. The company, after all, produced mostly hardware. As we’ve seen time and time again in the technology space, hardware eventually gets copied and commoditized, reducing excess profitability for industry leaders.

But Apple’s profitability didn’t dip heavily over the past decade. That’s because the company integrated a huge amount of software into its hardware, offering to keep customers within the Apple ecosystem. There’s a reason many people not only own iPhones, but also iMacs, AirPods, and iPads. Each device works seamlessly together, and switching from one product makes all of your other products less valuable.

The same can be true of Nvidia today. Yes, it produces some of the best GPUs on the market. But its CUDA software allows the company to capture both the hardware and the software side of the equation. Switching from Nvidia’s hardware, therefore, requires a lot more work than just swapping components.

Trading at 58 times earnings, Nvidia stock is far from cheap. But as Buffett has proven over the decades, paying a bit more for a premium business is worth it if your holding period is long enough. If you’re interested in adding an AI powerhouse stock to your portfolio, Nvidia should top your buy list.

Warren Buffett has led Berkshire Hathaway for six decades. During that time, the one-time textile manufacturer that became a huge conglomerate never paid a dividend. Not even a penny.

However, Buffett loves dividend stocks. He bought 12 stocks in the second quarter of 2025. All of them pay dividends. Which is the best of the bunch for income investors?

Image source: The Motley Fool.

Buffett’s dozen dividend stocks

The following table lists Buffett’s dozen dividend stocks purchased in Q2 (listed alphabetically):

Data sources: Berkshire Hathaway 13F filings, Google Finance.

Half of these stocks were new additions to Berkshire’s portfolio. Buffett bought more than 5 million shares of UnitedHealth Group in Q2, the biggest purchase of the group. The legendary investor probably viewed the health insurance stock as a rare bargain in today’s market after UnitedHealth’s share price plunged roughly 50%.

You might have noticed two similarly named stocks on the list. Homebuilder Lennar has two share classes. Buffett initiated a new position in Lennar Class A and added to the existing stake in Lennar Class B. Other new stocks bought in Q2 were security-products maker Allegion, homebuilder D.R. Horton, outdoor advertising company Lamar Advertising, and steelmaker Nucor.

Buffett also added more shares of several existing holdings. He has owned a sizable position in Chevron since 2020. The “Oracle of Omaha” (or one of Berkshire’s two other investment managers) has built stakes in Constellation Brands, Domino’s Pizza, Heico, Pool, and Pool Corp. more recently.

How these stocks compare

Most income investors would probably rank dividend yield near the top of the list of factors they consider when selecting stocks to buy. We can eliminate a few of Buffett’s Q2 purchases from contention because of low dividend yields: Allegion, D.R. Horton, and Heico. Lamar Advertising offers the juiciest yield, followed by Chevron.

However, yield isn’t everything. Income investors also want sustainable dividends. One of the most popular ways to determine the sustainability of a dividend is the payout ratio. Lamar Advertising’s payout ratio of 137.5% raises questions about how long the company will be able to fund the dividend at current levels. Constellation Brands’ payout ratio of 104.5% is also somewhat concerning. All of the other dividend stocks bought by Buffett in Q2, though, have payout ratios below 100%.

Many income investors like stocks with long track records of dividend increases. Although there aren’t any Dividend Kings on Buffett’s Q2 list, there is one Dividend Champion (stocks with 25 or more years of dividend hikes). Chevron has increased its dividend for 38 consecutive years.

Valuation is a factor for some income investors. They don’t want to buy a stock that’s so overpriced it could fall and offset any dividends received. Heico’s forward price-to-earnings ratio of 59.5 could cause some income investors to cross it off the list. So could Pool Corp. and Lamar’s forward earnings multiples of 29.9 and 29.5, respectively.

The best of the bunch for income investors

I think two stocks stand out as especially good picks for income investors right now among the 12 stocks bought by Buffett in Q2.

The runner-up is UnitedHealth Group. The health insurer’s dividend yield is attractive. Its payout ratio is a low 36.8%. UnitedHealth should be able to return to growth next year as it implements premium increases.

But Chevron is the best of the bunch, in my opinion. The oil and gas giant offers a juicy dividend yield. It has an impressive track record of dividend increases. The stock isn’t cheap, but neither is it absurdly expensive, with shares trading at 20 times forward earnings. Income investors should be able to count on steady and growing dividends from Chevron for a long time to come.

Who wouldn’t be interested in some Warren Buffett stocks to consider for their portfolio? After all, Buffett’s investing chops have not been exaggerated. He increased the value of his company Berkshire Hathaway (BRK.A -0.13%) (BRK.B -0.06%) by 5,500,000% (nearly 20% annually) over 60 years. In contrast, the S&P 500 index of 500 of America’s biggest companies gained about 39,000% (10.4% annually, on average) over the same period.

Here, then, are some stocks in the Berkshire Hathaway portfolio that you might want in your own. Do note, though, that the days of Buffett himself making all the investment decisions (often in consultation with his late business partner Charlie Munger) are over. He now has two investing lieutenants, Ted Weschler and Todd Combs, so some stocks in the portfolio may be their picks.

Image source: The Motley Fool.

1. Amazon

You might know that Berkshire Hathaway owns multiple insurance and energy operations, along with companies such as Dairy Queen International, See’s Candies, Fruit of the Loom, and the entire BNSF railroad. Buffett has long avoided many high-tech companies, but yes, his company now owns shares of Amazon.com (AMZN 3.12%) — some 10 million shares, in fact, per the latest disclosure.

You might want to consider buying Amazon stock, too, because it still has enormous growth potential. It features a hugely dominant online marketplace, but it’s also home to a major cloud computing platform, Amazon Web Services (AWS). Its shares are appealingly valued at recent levels, too, with a recent forward-looking price-to-earnings (P/E) ratio of 34, well below the five-year average of 46.

2. Lennar

You may not be very familiar with Lennar (LEN 5.19%), but it’s a major homebuilder in America, and its future is promising because America needs many more homes — especially affordable ones for young first-time home buyers. If interest rates drop in the near future, that could spur home buying, though a recession could thwart that trend.

Near term, it’s hard to know what will happen, but Lennar’s long-term outlook is promising. Patient investors can collect a dividend that recently yielded 1.5% — and that has grown by an annual average rate of 33% over the past five years.

Lennar shares are reasonably priced at recent levels, too, with a price-to-sales ratio of 1, on par with its five-year average, and a forward P/E of 13 above the average of 9. It’s a new holding for Berkshire, and Berkshire already owns 3% of the company.

3. Chevron

Chevron (CVX 1.50%) is Berkshire’s fifth-largest stock holding, and Berkshire now owns close to 7% of the energy giant. It’s another dividend-paying stock, with a recent fat 4.5% yield. It’s also been a big stock repurchaser, with its reduced share count leaving each remaining share more valuable.

Why might you buy Chevron stock? Well, thanks to various investments (such as its purchase of Hess), it stands to collect a lot of free cash flow in the years ahead — which can be used to pay dividends and increase dividends. Chevron is also well positioned to profit from both traditional energy sources as well as alternative energies.

Chevron’s forward P/E was recently 20, a bit above its five-year average of 14, suggesting it’s somewhat overvalued. You might wait for a lower price, or buy into it incrementally, or just buy anyway — as long as you plan to remain invested for many years.

4. UnitedHealth Group

Berkshire was in the news recently, for buying into the beleaguered health insurer UnitedHealth Group (UNH 1.24%). It’s a new holding for Berkshire, and was recently the 18th-largest position in the portfolio

Shares of the insurer were recently down 39% year-to-date, in part due to the fact that it’s being investigated by the Department of Justice for possible Medicare fraud. Also, its CEO has just stepped down. For those who see such issues as temporary and surmountable, this is a good buying opportunity.

You can be sure the company’s management is working to turn things around, and simple demographics paint a promising future, too, as our growing and aging population will continue to need healthcare — and medications. (UnitedHealth includes the pharmaceutical specialist Optum.)

5. Berkshire Hathaway

A last Berkshire Hathaway stock to consider is Berkshire Hathaway itself. It’s built to last, after all, and is likely to keep growing over time, though not at the breakneck speeds of yore, perhaps. Buffett is stepping down at the end of the year, but he’ll still be around, and his successor, Greg Abel, is a promising choice.

Berkshire Hathaway doesn’t pay a dividend, but when it’s under new management, that might change. It has all depended on whether there were more productive ways to deploy the company’s cash. So far there have been, but Abel might decide differently. Investing in Berkshire means you’ll always be a part-owner of any stock in Berkshire’s portfolio.

Give any or all of these companies some consideration for your own portfolio. And know that you can always take the easier (and also effective) path, recommended by Buffett himself, of opting for a simple, low-fee index fund.

May 5 (UPI) — The board of Berkshire Hathaway voted to keep Warren Buffett as its chairman and appointed a new company president and CEO.

On Sunday, board members voted unanimously to name Greg Abel as Berkshire Hathaway’s president and CEO starting Jan. 1 of next year and to keep Buffett as chairman, according to a company release.

Buffett, 94, stunned shareholders with a surprise announcement of his pending retirement during an annual shareholders meeting in Omaha, Neb., on Saturday in front of roughly 20,000 attendees.

“I could be helpful, I believe, in that in certain respects, if we ran into periods of great opportunity or anything,” he said over the weekend.

At the meeting Buffett asked the 12-member board to name Greg Abel, the current vice chairman of non-insurance operations, as its new company president and CEO.

Abel, 62, is also chair of Berkshire Hathaway Energy and since 2021 has been designated as Buffett’s successor.

On Friday, stock shares in Berkshire closed at a record market value of more than $1 trillion.

Buffett, Berkshire Hathaway’s largest shareholder, controlling approximately 31.2% of its voting interest, in February celebrated 60 years at the helm of the global company he helped create in the mid-1950s.

Meanwhile, the billionaire company chief said he believes the American economy will steady itself after the market turmoil created in the wake of the announcement of international tariffs by U.S. President Donald Trump, reiterating his position that tariffs should not be used as “an act of war” with other nations.

‘Oracle of Omaha’ stuns shareholders, but pledges to maintain investments in group and says he will still be ‘hanging around’.

Billionaire investor Warren Buffett has announced that he will retire from leading his Berkshire Hathaway business group at the end of the year.

Buffet told the group’s annual shareholder meeting on Saturday that he would step down as chief executive at the close of 2025, handing over the reins to vice chairman Greg Abel, already known to be his anointed successor.

“I would still hang around and could conceivably be useful in a few cases, but the final word would be what Greg said in operations, in capital deployment, whatever it might be,” said Buffett at the meeting in Omaha, Nebraska.

He added that the board of directors would be “unanimously in favour” of his recommendation.

About an hour later, Abel came out to oversee a formal Berkshire business meeting without Buffett. “I just want to say I couldn’t be more humbled and honoured to be part of Berkshire as we go forward,” he said.

Abel, 62, who has been the group’s vice chairman since 2018, managing non-insurance operations, was named Buffett’s expected successor as chief executive in 2021, but it was always assumed he would not take over until after Buffett’s death.

Previously, 94-year-old Buffett, known as the “The Oracle of Omaha” because of the influence he wields in business and financial circles, has always maintained he has no plans to retire.

His decision to step down caps a remarkable 60-year run during which he transformed Berkshire from a failing textile company into a $1.16 trillion conglomerate with liquid assets of $300bn.

Buffett’s net worth as of Saturday is $168.2bn, according to Forbes magazine’s real-time rich list. On Saturday, he pledged to keep his fortune invested in the company.

“I have no intention – zero – of selling one share of Berkshire Hathaway. I will give it away, eventually,” Buffett said.

“The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg’s management than mine,” he said.

Earlier Saturday, Buffett warned about the dire global consequences of President Donald Trump’s tariffs, saying that “trade should not be a weapon” but “there’s no question that trade can be an act of war.”

Buffett said Trump’s trade policies have raised the risk of global instability by angering the rest of the world.

OMAHA — Investor Warren Buffett told thousands of Berkshire Hathaway shareholders Saturday that the United States shouldn’t use “trade as a weapon” and anger the rest of the world as he says President Trump has done with his tariffs that roiled global markets.

“It’s a big mistake in my view when you have 7.5 billion people who don’t like you very well, and you have 300 million who are crowing about how they have done,” Buffett said as he addressed the topic on everyone’s mind at the start of the shareholders meeting.

While Buffett said it is best for trade to be balanced among countries, he doesn’t think Trump is going about it the right way with his widespread tariffs. He said the world would be safer if more countries were prosperous.

“We should be looking to trade with the rest of the world. We should do what we do best and they should do what they do best,” he said.

America has been going through revolutionary changes ever since its birth and the promise of equality for all, which wasn’t fulfilled until years later, Buffett said. But nothing that is going on today has changed his long-term optimism about the country.

“If I were being born today, I would just keep negotiating in the womb until they said, ‘You could be in the United States,’ ” Buffett said.

Market turmoil doesn’t create big opportunities

Buffett said he just doesn’t see many attractively priced investments that he understands these days, so Berkshire is sitting on $347.7 billion in cash, but he predicted that one day Berkshire will be “bombarded with opportunities that we will be glad we have the cash for.”

Buffett said the recent turmoil in the markets that generated headlines after Trump’s tariff announcement last month “is really nothing.” He dismissed the recent drop in the market because he’s seen three periods in the last 60 years of managing Berkshire when his company’s stock was halved. He noted when the Dow Jones industrial average went from 240 on the day he was born in 1930 down to 41 during the Great Depression as a truly significant drop in the markets. Currently the Dow sits at 41,317.43 points.

“This has not been a dramatic bear market or anything of the sort,” he said.

Buffett said he hasn’t bought back any of Berkshire’s shares this year because they don’t seem to be a bargain either.

Investor Chris Bloomstran, who is president of Semper Augustus Investments Group, told the Gabelli investment conference Friday that a financial crisis might be the best thing for Berkshire because it would create opportunities to invest at attractive prices.

“I’m sure he’s praying that the trade war gets worse. He won’t say that publicly, but Berkshire needs a crisis. I mean Berkshire thrives in crisis,” Bloomstran said.

Berkshire meeting attracts thousands

The meeting attracts some 40,000 people every year who want to hear from Buffett, including some celebrities and well-known investors. This year, former Secretary of State Hillary Clinton also attended. Clinton, who lost the 2016 presidential election to Trump, was the last candidate Buffett backed publicly; he has shied away from politics and any controversial topic in recent years for fear of hurting Berkshire’s businesses.

Haibo Liu camped out overnight outside the arena to be first in line Saturday morning. Liu said he worries that this year could be Buffett’s last meeting since he is 94, so he made it a priority to attend his second meeting.

“He has helped me a lot,” said Liu, who traveled from China to attend. “I really want to express my thanks to him.”

Worries about replacing Buffett

Shareholder Linda Smith, 73, first learned about Buffett and Berkshire Hathaway when she rented a room from his sister, Doris, while she was a graduate student in Washington, D.C. Smith said Doris came home from an annual meeting not long after Berkshire bought See’s Candies and told her she had to buy the stock.

Smith couldn’t buy it immediately because the price of a single share was about $3,400, about the same as her annual income as a grad student. But as soon as she got a job after college, she took her friend’s advice and began saving up to buy some of the stock that now sells for $809,350.

Over the years, Smith estimates she has probably attended about 20 annual meetings — often bringing a friend.

“I really like to listen to Warren Buffett — particularly this year with everything that has happened,” Smith said.

Buffett has long said he has no plans to retire because he enjoys figuring out where to invest Berkshire’s money. He plans to continue working until he dies or becomes incapacitated. But he remains in good health even though he does use a cane, and he shortened the meeting’s question and answer period this year by a couple of hours.

“I think even if he dies, these businesses will retain their value,” Smith said while looking around the 200,000-square-foot exhibit hall filled with booths from Berkshire companies such as BNSF railroad, Geico insurance, Pilot truck stops, Duracell batteries and many others. “I anticipate my stock going down for a while, but good businesses and good people will come back,” she said.

Buffett has said that Vice Chairman Greg Abel, who already oversees all of Berkshire’s non-insurance businesses, will take over as chief executive officer when he is gone.

Shareholders such as Steven Check, who runs Check Capital Management, aren’t especially worried about succession because Abel is proven and Berkshire’s businesses largely run themselves. Buffett has said that Abel might even be a more hands-on manager than he is and get more out of Berkshire’s companies.

“I think we’ll get a more hands-on manager and that could be a good thing,” Check said.

Funk writes for the Associated Press.