The BT (LSE:BT.A) share price has been whacked by the market in the last five years. It’s down 52% over that time, to clear and pretty vocal investor dismay.

A recent shift in tactics could turn things around, however. It’s an intriguing move that could add a significant boost to BT’s revenue.

So my question today is this. At just over £1, is the BT share price ripe for the picking?

Because I follow Warren Buffett, I know just what he might say. “Whether we’re talking about stocks or socks, I like buying quality merchandise when it is marked down”.

Does that apply here? More to the point: is BT ‘quality merchandise’ going for a steal, or should I leave it on the shelf where it belongs?

6.5% dividend yield

A 6.5% dividend for holding BT shares seems appealing on paper. But a slumping share price means many long-term holders will be in the red. The shares peaked at £10.53 on 31 December 1999. It’s been a slow downwards bleed ever since.

The point being: cheap shares are not always bargains. Sometimes the market does price companies accurately. That should factor into all my calculations.

BT halted dividend payments in 2020 due to the uncertainty around the pandemic. They resumed in 2022 at 7.70p per share. And that’s the level they’ve been held at.

City analysts forecast BT will pay dividends of 7.79p per share and 7.86p per share in 2024 and 2025. So there is a slight uplift on the cards, even if it is modest. Of course, analysts aren’t always right.

Where’s the growth?

If I was to take a long-term position here, I’d want to see ambition from the top brass. I’d want to know there was a plan to switch the BT share price from sinking to soaring.

That may have appeared in the last week. Through its EE mobile arm, BT is making a move into selling electronics. These include smart watches, TVs, and games consoles. It seems a sensible idea to use BT’s purchasing power to grab market share from e-commerce retailers like Amazon or Argos.

There are also plans afoot to drop the BT Mobile brand, and let EE take over that division entirely. This is also a pragmatic decision.

In 2023, BT Mobile was the most complained-about mobile provider to the regulator Ofcom. Customers said they hated how difficult it was to change between providers, as well as how BT Mobile dealt with their complaints.

Instead BT will sell all of its mobile provision through the better-regarded EE brand.

EE also has one of the largest allocations of 4G and 5G mobile spectrum in the UK.

Its nearest rivals in this regard, Three and Vodafone, recently announced a merger. Virgin also merged with O2 in 2021. So while the number of challengers is shrinking, these larger conglomerates pose more of a threat.

Could BT still be a turnaround buy for me? I’m uncertain that the 6.5% dividend alone is worth my money, given the company’s patchy history. And buying an out-of-favour stock requires serious conviction. I’m not sure I’ve seen enough from BT yet to merit that.

The post The BT share price is crashing! Is now finally time to buy? appeared first on The Twelfth Magpie.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tom Rodgers has positions in Amazon.com. The Motley Fool UK has recommended Amazon.com and Vodafone Group Public. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’ve scoured the list of the largest FTSE companies that have raised their dividends every year for at least five years, and have also seen their share price rise over the same period.

It wasn’t an easy task.

Of the largest UK public companies, only a handful meet this strict criteria.

Growing dividends at the same time as growing profits is an exceedingly difficult thing to achieve.

Why? Well, if a business commits too much of its free cash flow to paying out dividends to shareholders, that money can’t be used to expand its business. It also can’t use that spare cash for investing in new technology or acquisitions. These moves can often boost revenues or profits.

But the companies that manage the task are going straight to the top of my watchlist. If I want to have enough cash to retire, I’ll need an ISA or SIPP stacked full of these compounding giants.

Growing by buying

Bunzl (LSE:BNZL) is not the kind of flashy stock beloved by forum posters who debate its price day in and day out. But it is a consistent and predictable profit-making machine.

The £10bn FTSE 100 industrials company sells its products in more than 30 countries. These products include medical gowns, disinfectants, and food packaging. By themselves, these may goods with low profit margins. But they make Bunzl an incredibly important supplier for thousands of businesses worldwide.

Bunzl also has a successful acquisition strategy, spending £4.5bn to buy up more than 190 smaller businesses since 2004.

Since 2017, net profits — also called a company’s “bottom line” — have grown by 90%.

So let’s talk about the dividends on offer here. WIth a share price of 2,492p at time of writing, and four payouts a year of 57.72p, that works out to a 2.15% dividend yield. It’s not a king’s ransom by any stretch.

But Bunzl has grown its payouts to income investors for more than 23 years! The share price is also 40% higher in the last five years.

While this is unlikely to light anyone’s world on fire, it has been consistent and predictable. For me, that’s crucial. I’ve wasted enough money on illiquid, lottery-ticket stocks to know the difference between promises and results.

Long-term strategy

As a long-term compounding growth investor I want to avoid FTSE companies with patchy or inconsistent records.

I have to think like Warren Buffett and remember that I’m buying a business — not just a story. This is in my mind every time I invest in dividend stocks and shares.

That high share price of almost £30-a-pop may put off newer or younger investors who are used to being able to buy fractional shares in low-cost broker accounts. I could consider this a downside, as it may deter fresh capital from coming into the business.

But as we heard from HMRC in October 2023, fractional shares don’t qualify for the tax advantages of being held in an ISA.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

I’m focused on steadily growing my net worth over the next 15 years or so before I retire. I’m not a joyless automaton, but I’ll leave my gambling to the odd bet on the football rather than risking my retirement cash.

The post FTSE dividend hero alert! I think I can retire on these UK shares appeared first on The Twelfth Magpie.

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Tom Rodgers has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The tale of legendary investor Warren Buffett needs no introduction. Starting with just a small sum, the ‘Oracle of Omaha’ has amassed a fortune of over $100bn in his eight decades of stock market investing.

During his time as Berkshire Hathaway CEO, he’s generated an average annual return of around 20% for shareholders, double that of the S&P 500.

With his conglomerate experiencing this success, I think it’s time I tried to steal some of Buffett’s wisdom in an attempt to replicate it for my own portfolio.

With that, here are two Berkshire holdings I’d buy today if I had the cash.

Apple

First up is Apple (NASDAQ:AAPL). The business has become one of the best-known brands on the planet.

So it’s no surprise that Buffett labels it as one of his best investments, being the backbone of Berkshire’s equity portfolio.

Key to Buffett’s investing strategy is to buy companies you know and understand. And this certainly resonates with Apple.

With over one billion people using its products, it’s easy to see the value of the business.

While far from monumental in size, Apple stock also provides investors with a dividend yield of around 0.5%. For Buffett and his 915m shares, this equated to a payout of nearly $900m last year!

On top of this, the firm has put greater emphasis on creating more value for shareholders. As flagged in its latest results, Q3 saw it return over $24bn to investors.

I also like the moves the business is taking away from its core products. Q3 saw its Services sector report record revenue, including over 1bn paid subscriptions. Earlier this year, Apple also announced the launch of its VR headset, priced at $3,499.

The largest threat to Apple is clearly inflation. As well as rising costs, racing inflation could deter consumers from splashing out on its products and services.

Yet with its market grip and renowned brand recognition, I think Apple is a smart long-term play.

Bank of America

The second stock is Bank of America (NYSE:BAC). There’s been quite a bit of uncertainty across the financial sector this year. And events such as the collapse of Silicon Valley Bank have spooked investors.

However, like Buffett, I buy for the long haul, so I see a host of opportunities within the sector right now, including Bank of America.

The stock takes up slightly less room in Berkshire’s portfolio, but there are still ample reasons to like it. Firstly, it looks cheap. As I write, it trades on a price-to-earnings ratio of below 9. Secondly, it has a dividend yield of over 3%.

On top of this, the bank also posted a strong set of Q2 results, including a 19% jump in net income and a 21% rise in its earnings per share.

Further, it’s benefited from rising interest rates, with net interest income rising 14%.

Given the current economic environment, Bank of America remains constantly under pressure. This has been seen recently as customers demand higher saving rates, in turn potentially impacting the firm’s net interest margin. The lingering threat of recession is also bad news for the bank.

However, with a low valuation and appealing yield, I deem the stock a long-term winner.

The post Warren Buffett owns these 2 stocks. I’d buy them today appeared first on The Twelfth Magpie.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has positions in Apple. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Warren Buffett is one of the most successful investors ever. And like many, the ‘Oracle of Omaha’ started investing with a small amount.

With his fortune being over $100bn, it’s unlikely I’ll be able to emulate his success. However, I think this shows that even without savings, building wealth is possible.

If I had to start today, here are the methods I’d copy from Buffett to do it.

Invest regularly

With no savings, I don’t have a lump sum of cash to kickstart my investing journey. Therefore, putting money aside and investing it on a consistent basis is key to helping my savings pot grow.

By doing this, I can reap the benefits of compounding. Buffett has alluded to the power of this method, stating how he’s generated his wealth from “a combination of living in America, some lucky genes, and compound interest”, Ignoring the first two (as neither applies to me), placing an emphasis on compounding is a strategy I can adopt to aid me in the long run.

Long-term approach

With that, Buffett doesn’t invest for a quick payday.

Building wealth isn’t going to happen overnight, it’s a process. And as has been proven time and time again, adopting a long-term approach is the best way to reap the rewards.

Volatility in the stock market is inevitable. And we’ve most certainly seen this in the past few years. However, these short-term peaks and troughs are ironed out in the long run.

Take the S&P 500 as an example. 2022 saw the index fall by 18%. Yet in the last decade, it’s risen around 16% a year on average.

With no savings, I may often feel inclined to sell when I see the value of my investments dwindling. However, by viewing them over a timeframe of five to 10 years minimum, I can ignore short-term volatility in favour of long-term growth.

On top of this, by investing on a regular basis and with a long-term approach, I’d also benefit from ‘pound cost averaging’, which essentially balances out the price that I buy at. 

Be alert

I’d also have to be alert. Buffett has stated on multiple occasions to “be greedy when others are fearful”. And this means that when opportunities arise in the stock market to buy quality companies cheaply, I must be ready to act.

Buffett did this in the global financial crash of 2008 when he bought a host of stocks at slashed prices.

What to buy?

So, with all that, what sort of companies should I be buying?

Well, Buffett’s portfolio includes the likes of Apple, Coca-Cola, and Bank of America. And it’s quality companies in which I see long-term growth potential (such as Buffett did with these) that I should be targeting.

Of course, replicating the methods of Buffett is easier said than done. However, by copying him and despite a lack of savings, I’m fairly confident I could build wealth in the long run.

The post No savings? I’d copy these Warren Buffett methods to build wealth appeared first on The Twelfth Magpie.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has positions in Apple. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Across his years of investing, the legendary Warren Buffett has built a fortune comfortably over $100bn.

During his tenure as CEO of Berkshire Hathaway, Buffett has more than pleased shareholders with an impressive average annual return of around 20%. That’s double the return of the S&P 500.

As an investor, I have nowhere near the experience Buffett has amassed over the years. Therefore, looking to the Oracle of Omaha for some inspiration seems like a smart idea. As I continue to build out my portfolio, here are the Buffett methods I’m using to be successful.

Invest in what you know

My favourite method used by the legendary investor is to invest in companies you know and understand. This means owning businesses where you can easily appreciate their core features.

A simple way of doing this is by understanding how a company makes money and what influences its industry. By doing so, you eliminate uncertainties and avoid the risk of running into complex issues that impact the company’s performance.

Buy for the long run

Another method I’d adopt is investing for the long term. Buffett himself once said: “if you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes”.

The stock market is inevitably volatile. And this has been clear to investors in the last few years with the pandemic and its knock-on effects. However, these short-term peaks and troughs are nullified with a long-term approach.

Buffett has stakes in a host of companies that he’s held for years, such as Coca-Cola. By replicating this approach, I’d aim to build wealth in the long run.

Be greedy

Finally, Buffett has talked about being greedy when opportunities in the stock market arise.

This was most certainly the case in the global financial crash of 2008 when he snapped up a variety of stocks for a cut-down price. And with the declines we’ve seen across global markets in the past few years, this message resonates once again.

With many stocks taking a hit in recent times, this presents an opportunity for me to add high-value companies to my portfolio for cheap.

What should I buy?

So, with the above in mind, what stocks should I be adding to my portfolio?

Well, while I don’t have any spare cash right now, if I did, I’d look to companies like Apple (NASDAQ: AAPL).

The value of the business is easy to understand, with over one billion people using Apple products.

Looking at the long-term returns of the stock, it’s also clear to see the attraction of Apple. While past performance is no indication of future returns, the last five years have seen it rise an impressive 273%.

The tech company is Berkshire Hathaway’s largest holding, making up nearly 50% of its portfolio. And at the firm’s recent annual shareholders meeting, Buffett labelled Apple as the best business he owns. 

As Buffett said: “someone is sitting in the shade today because someone planted a tree a long time ago”. I’d hope that if I bought Apple today, I’d hold it for years to come and generate some healthy returns.

The post I’d use these Warren Buffett methods to build wealth! appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Warren Buffett is the world’s greatest stock market investor. So, I like to keep an eye on his trades.

Last quarter, he made a very interesting move. Let me explain.

Buffett just bought a chip stock

In the past, Buffett wasn’t a big fan of the technology sector. In his words, this sector wasn’t in his ‘circle of competence’.

But in recent years, his attitude towards tech has changed. Today, he has a huge holding in Apple (worth over $130bn). He also has positions in Amazon, Snowflake, Visa, Mastercard, HP and Verisign.

What stands out to me, however, is that in Q3, Buffett branched out into the semiconductor space.

According to 13F regulatory filings, the investment guru bought $4.1bn worth of shares in Taiwan Semiconductor Manufacturing Company (NYSE: TSM) – the world’s largest chip manufacturing business – last quarter.

Consequently, Taiwan Semi is now a top 10 holding for the investment guru.

Long-term growth potential

There are a couple of takeaways from this move, to my mind.

One is that Buffett obviously sees long-term investment potential here. This makes sense. Semiconductors play a crucial role in today’s digital world, powering everything from smartphones to electric vehicles. And looking ahead, demand for chips is likely to increase on the back of the growth of industries such as artificial intelligence (AI), cloud computing, 5G and robotics.

It’s worth noting here that experts believe the global semiconductor market could be worth around $1.4trn by 2029, more than double what it’s worth today. This industry growth should provide tailwinds for chip stocks.

Another is that he sees value in the space right now. This year, chip stocks have taken a massive hit on the back of the global economic slowdown. Buffett clearly sees an opportunity after this decline.

My semiconductor stocks

I don’t own this particular chip stock at present. However, I do own a number of other stocks in this area of technology as, like Buffett, I’m bullish on the industry. Currently, I own shares in:

• Nvidia – a leading designer of high-power graphics processing units (GPUs). Its products are used for AI, autonomous driving, data centres, video gaming and more.
• ASML – a leading maker of advanced semiconductor manufacturing equipment. It actually sells equipment to Taiwan Semi.
• Lam Research – another top maker of advanced semiconductor manufacturing equipment. Nearly all high-powered chips today are made with its technology.

Looking ahead, I plan to keep buying more of these stocks. I’m also looking at a few others in the sector including KLA, a maker of chip inspection equipment, and Advanced Micro Devices, which develops high-performance chips for a range of industries, and Taiwan Semiconductor itself.

It’s worth pointing out that chip stocks are higher-risk investments. The chip industry is cyclical and as a result, chip stocks tend to be quite volatile. We’ve seen this volatility this year. Most stocks have experienced significant pullbacks.

However, I’m comfortable with this volatility. I’m looking to the long term here, and I think the prospects for the sector in the long run are attractive.

The post Warren Buffett just made a big move appeared first on The Twelfth Magpie.

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Ed Sheldon has positions in Amazon.com, Apple, Asml, Lam Research, Mastercard, Nvidia, and Visa. The Motley Fool UK has recommended Amazon.com, Apple, Asml, Lam Research, Mastercard, Nvidia, and Snowflake. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recently, I was taking a look at Warren Buffett’s stock portfolio. And one thing jumped out at me – over 70% of his portfolio is invested in just five stocks.

Here, I’m going to highlight those five stocks Buffett is betting big on. I’ll also discuss whether I’d buy these shares for my own portfolio today.

Apple

Buffett’s largest holding is currently technology giant Apple (NASDAQ: AAPL). At 30 June, he held 915.23m Apple shares, worth about $137bn at today’s share price.

This is a stock I already own. And it’s one of my largest positions. So it’s fair to say I’m quite bullish on it.

Would I buy the stock today though?

Well, I would if I didn’t already have such a large position. To my mind, Apple’s P/E ratio of 22 is quite reasonable, given its brand power, ecosystem, growth prospects (healthcare and electronic payments), and strong balance sheet.

Risks to consider with Apple include supply chain disruptions from China and weaker consumer spending globally. Overall however, I see the long-term risk/reward skew as attractive.

Bank of America

Buffett’s second-largest holding is Bank of America. He held 1.03m shares at 30 June, worth around $39.7bn at today’s share price.

While Buffett is clearly bullish here, this is not a stock I’d buy for my own portfolio. One reason is that banks are extremely cyclical. If the economy goes downhill, bank profits tend to follow. Another reason is that big banks tend to have very complex balance sheets, so it’s hard to assess risks.

It’s worth pointing out that this stock is quite cheap right now. However, that doesn’t change my view. There are other stocks that are better fit for my portfolio.

Chevron

Oil giant Chevron is Buffett’s third-largest holding. At 30 June, he owned 163.5m shares, worth $30.5bn at today’s share price.

This is another Buffett stock I’d pass on. Chevron is doing well at the moment due to high oil prices. This is reflected in its share price. However, in the long run, the company could face structural challenges as the world transitions to renewable energy. So this stock is not for me.

Coca-Cola

His fourth-largest holding is Coca-Cola. At 30 June, he owned 400m shares, worth around $24.5bn at today’s share price.

This is a stock I would certainly consider for my own portfolio. It has strong brands, a good long-term track record in terms of profitability, and pays a decent dividend. Overall, there’s a lot to like.

My only issue with Coca-Cola is that it looks a little expensive right now. Currently, the P/E ratio is 24. I would prefer to buy the stock at a lower valuation to ensure a margin of safety.

American Express

Finally, there’s American Express. Buffett owned 151.6m shares at 30 June, worth about $23.5bn today.

I can see both a bull and a bear case here right now. On the bullish side, the company looks set to benefit from higher interest rates and increased travel spending. On the bearish side however, it could experience higher loan losses due to weaker economic conditions.

Given the credit risk, I’d probably buy Visa or Mastercard (both also held by Buffett) over American Express right now. Unlike Amex, these companies don’t face credit risk as they simply operate payments networks.

The post 74% of Warren Buffett’s portfolio is invested in these 5 stocks appeared first on The Twelfth Magpie.

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Ed Sheldon has positions in Apple, Mastercard, and Visa. The Motley Fool UK has recommended Apple and Mastercard. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company.  Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Warren Buffett owns plenty of well-known blue-chip stocks. Coca-Cola, Apple, and Kraft Heinz are some examples. However, he also owns quite a few lesser-known stocks that aren’t on every investor’s radar.

Here, I’m going to highlight one of these latter stocks. This Buffett choice has come down a long way recently and, as a result, I’m considering buying it for my portfolio.

Buffett owns this tech stock

The stock I’m referring to is Snowflake (NYSE: SNOW). It’s a US technology company that offers cloud-based data storage and analytics services via a Software-as-a-Service (SaaS) model. Currently, it has over 6,800 customers across industries such as financial services, healthcare, manufacturing, technology and retail. And around 250 of these are ‘$1m+’ customers.

As for Buffett’s holding, regulatory filings show that at 30 June, his investment company, Berkshire Hathaway, owned 6,125,376 Snowflake shares. At today’s share price ($129), that equates to around $790m worth of stock.

Why I’m considering buying Snowflake stock

There are a few reasons Snowflake stock looks interesting to me right now. One is that the stock is currently around 70% off its highs. That’s a huge decline.

Now that doesn’t automatically make it a buy. However, if a high-quality growth stock has fallen by that magnitude, it’s often worth taking a closer look. Particularly if the stock is owned by the greatest investor of all time, aka ‘The Oracle of Omaha’.

Another is that the company continues to grow at a rapid clip. In its latest results for the quarter ended 31 July, product revenue came in at $466.3m, up 83% year over year. Encouragingly, net revenue retention rate for the period was 171%, indicating that existing customers are signing up for more of the company’s services.

A third reason is there’s plenty of room for growth. According to Grand View Research, the global cloud computing market is expected to be worth USD $1.6trn by 2030, registering a compound annual growth rate (CAGR) of 15.7% between now and then. This market growth should provide strong tailwinds for the company going forward.

Finally, the company appears to be on the cusp of delivering consistent profits. This financial year, Wall Street analysts expect the group to generate net profit of $56.2m. Meanwhile, next year, they expect a net profit of $153m. Regular profits could make the stock more appealing to institutional investors.

High valuation

Now it’s worth pointing out that even after its huge share price fall, this Buffett stock is still very expensive. If we use next year’s earnings forecast of $0.436, the forward-looking price-to-earnings (P/E) ratio here is just under 300. Meanwhile, the forward-looking price-to-sales ratio is about 13. The high valuation adds risk.

Given this valuation, if I was to buy Snowflake stock, I wouldn’t make it a big position in my portfolio. I would take a small position as a more speculative holding.

Right now, I still haven’t decided whether I want to pull the trigger and buy. However, I certainly think this Buffett stock looks interesting at current levels.

The post This Warren Buffett stock is down 68% and I’m thinking about buying it appeared first on The Twelfth Magpie.

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Edward Sheldon has positions in Apple. The Motley Fool UK has recommended Apple and Snowflake Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As a savvy investor I looked for investing role models, and who better than The Sage of Omaha, Warren Buffett. Here are some famous quotes from the man himself. I used them to shape my portfolio.

Warren Buffett says invest for the long term!

“Our favourite holding period is forever. We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint”.

From the above quote, I learnt about buying and holding for the long term. There are many investors and strategies that are all about making a quick profit. This includes flipping stocks and shares when they may be up and down. I’ve adopted the approach of choosing quality stocks to own for a long time.

Taking advantage of price dips, like now!

Warren Buffett said, “When we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”.

I learnt that when a stock I have on my buy list dips in price, there is an opportunity to buy shares, or buy more shares in a stock I already own, at a cut price. I would expect the share price to bounce back, providing me with capital returns too. A perfect example of this is the current economic volatility. I have scoured the FTSE for many UK shares that I believe are marked down currently. Presently, the stock market is struggling against the backdrop of soaring inflation and geopolitical issues.

Research, read, think!

“The best way to think about investment is to be in a room with no one else and to just think. If that doesn’t work, nothing else is going to work”.

It is said that Warren Buffett spends approximately 80% of his day reading and thinking. What I took from this is a core part of my investment mantra. I do as much research and due diligence as possible before buying a stock. I must confess this is one of my favourite lessons and I do admit to making mistakes in my early days due to a lack of research.

Expertise

“The important thing is to know what you know and know what you don’t know”.

This particular quote hits home with me personally. Warren Buffett has publicly admitted in the past he has passed up the opportunity to invest in quality companies because he did not understand them.

I don’t profess to be an expert in any given field. However, I do have a decent understanding of technology, and property. I’ve tried to keep my portfolio diverse, and only purchased stocks I know enough about, including the sector they operate in. I own a number of tech stocks, such as Sage Group, as well as real estate investment trusts (REITs), such as Warehouse REIT.

To summarise, these, and many more, of Warren Buffet’s lessons have helped me shape my holdings.

The post Here’s how I follow Warren Buffett to shape my portfolio! appeared first on The Twelfth Magpie.

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Jabran Khan has positions in Warehouse REIT and Sage Group. The Motley Fool UK has recommended Sage Group and Warehouse REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Warren Buffett is widely regarded as the greatest stock market investor of all time. As a result, many people like to copy his moves.

Recently, Buffett has been ploughing billions of dollars into one specific sector. Should I follow him? Let’s discuss.

Warren Buffett is buying oil stocks

Looking at the latest 13F filing (large investment firms are required to disclose their US stock positions to US regulators via 13F filings) for Buffett’s investment company Berkshire Hathaway, I can see that he’s been putting a lot of money into oil stocks recently.

In the second quarter, Buffett bought 120.9m shares in oil giant Chevron. At today’s share price, that represents about $19.7bn worth of stock. Meanwhile, he also picked up about 5.9 million shares in Occidental Petroleum. At today’s market price, that represents about $442m worth of stock.

After these purchases, Buffett held 159.2m shares in Chevron and 226.1m shares in Occidental (at the end of June). At today’s share prices, these holdings are worth about $26bn and $17bn, respectively.

Should I follow Buffett into oil?

While I tend to pay close attention to Warren Buffett moves myself, and own a number of the stocks he does (Apple, Amazon, Mastercard, Visa, etc), this isn’t a move I’m tempted to follow.

One issue I have with oil stocks is that it’s hard to forecast future revenues and earnings. That’s because the price of oil – which has a major impact on energy firms’ revenues – is unpredictable. Going forward, it could remain high. Or, it could fall again.

Another issue for me is the ongoing shift to renewable energy. Right now, governments all around the world are making plans to cut back on fossil fuel use and transition to clean energy. This adds some uncertainty from an investment perspective when it comes to oil stocks.

Linked to this is the increasing focus on sustainable investments. Today, many large money managers are offloading their traditional energy stocks because they don’t meet ESG criteria. I think this trend is likely to continue. In the long run, it could limit share price upside.

Better stocks to buy

Of course, Buffett may end up doing well with oil stocks. Right now, oil prices are high due to supply/demand imbalances created during the pandemic, and oil companies are minting money as a result.

Chevron, for example, recently reported earnings of $11.6bn for the second quarter of 2022, up from $3.1bn a year earlier. As a result of their big profits, these companies are rewarding investors with dividends and share buybacks. If oil prices remain high, oil stocks could continue to generate attractive returns for investors.

However, this trade isn’t for me. All things considered, I think there are better investments for my portfolio today.

The post Warren Buffett is piling into this sector. Should I follow him? appeared first on The Twelfth Magpie.

More reading

• CMC Markets: a FTSE dividend star worth considering for an ISA or SIPP?
• Income investors love insurance stocks. Here’s my top pick from the FTSE 100
• See what £10,000 invested in dismal Diageo shares just 1 week ago is worth today
• Up 1,146%! 7 things I’ve learned from the stunning Rolls-Royce share price comeback 
• 4 steps to building a £38,456 retirement income with ISA shares

Ed Sheldon has positions in Amazon, Apple, Mastercard, and Visa. The Motley Fool UK has recommended Amazon, Apple, and Mastercard. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.