Warren Buffett has always liked stocks. However, there are times when you like them less. Now is one of those times.
The legendary investor has been a net seller of stocks for seven consecutive quarters. His Berkshire Hathaway sold 11 shares in the second quarter of 2024. But one of them still looks like a great pick for income investors.
Stocks Buffett Sold in the Second Quarter
Buffett’s biggest sale in the second quarter was cutting nearly half of Berkshire Hathaway’s position in Apple. However, despite the aggressive selling, Apple remains the largest holding in Berkshire’s portfolio.
Two financial services giants have also fallen out of Buffett’s favor to some extent. Berkshire continued selling shares of bank of america in the second quarter and also sold 21% of its stake in Capital One Financial.
The 94-year-old investor reduced Berkshire’s position in Chevron (NYSE: CVX) 3.6% in the second quarter. He also trimmed the conglomerate’s positions in Liberty Medium Class A and Liberty Medium Class C by less than 2% each.
Berkshire’s other relatively modest sales in the second quarter included Floor and decoration, Louisiana-Pacificand T-Mobile US. However, it completely abandoned Berkshire’s positions in global paramount and Snowflake.
Several Dividend Stocks in the Mix
Income investors could say goodbye to some of the stocks Berkshire sold in the second quarter. Floor & Decor, Liberty Media and Snowflake do not pay dividends.
Two others offer negligible dividends. Apple’s forward dividend yield is only 0.44%, while Louisiana-Pacific’s forward dividend yield is 0.97%.
Capital One Financial might be a little more attractive to income investors with its forward dividend yield of 1.63%. T-Mobile US and Paramount Global pay even better dividends with yields of 1.73% and 1.89%, respectively.
Buffett likes Bank of America less than he did in the past, but he can’t have much to complain about the big bank’s dividend. BofA’s forward dividend yield is 2.65%. The company recently increased its dividend payout by 8%.
The obvious purchase for income investors
However, there is one stock among those sold by Buffett in the second quarter that I think is an obvious buy for income investors. Chevron offers a juicy forward dividend yield of 4.58%. The company has increased its dividend for 37 consecutive years.
Several factors could help Chevron in the short term. Lower interest rates should boost the U.S. economy, potentially spurring greater oil and gas consumption. Tensions in the Middle East could keep oil prices high.
Looking a little further, an arbitration panel is scheduled to hold a hearing next year to address a challenge raised by ExxonMobil (NYSE: XOM) related to Chevron’s pending acquisition of Hesse (NYSE: HES). Chevron CEO Mike Wirth said on the company’s second-quarter earnings conference call that he is confident in a positive outcome of this arbitration.
Assuming Wirth’s optimism proves justified, Chevron’s acquisition of Hess should significantly expand and diversify the company’s portfolio of oil and gas assets. Most importantly for income investors, the transaction should also generate increased cash flow and dividend distributions to shareholders.
Demand for oil and gas is likely to remain strong for a long time, even with greater adoption of renewable energy. Chevron is also investing heavily in carbon capture and storage technology. If these efforts are successful, the company’s long-term prospects will be especially bright.
Buffett still likes Chevron even though he sold some shares in the second quarter. Chevron wouldn’t be Berkshire’s fifth-largest holding if it didn’t. I think income investors should also like this high-yield dividend stock.
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Bank of America is an advertising partner of The Ascent, a Motley Fool Company. Keith Speights has positions in Apple, Bank of America, Berkshire Hathaway, Chevron and ExxonMobil. The Motley Fool has positions and recommends Apple, Bank of America, Berkshire Hathaway, Chevron and Snowflake. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.
Warren Buffett sold 11 shares in the second quarter. But 1 is still an obvious buy for income investors. was originally published by The Motley Fool