There are approximately 50 long-term Warren Buffett stocks to choose from. These range from the highest market value of Apple (NASDAQ:AAPL) at $2.5 trillion to the lowest — Liberty Latin America Class C (NASDAQ:LILAK) — with a value of around $1.5 billion.
If you’re familiar with Warren Buffett’s investing style, you know that the Berkshire Hathaway (NYSE:BRK.B) CEO loves to collect dividends from these companies.
The other thing that Buffett really likes is share repurchases. That’s because the company’s share count is reduced, giving shareholders a larger piece of the company without investing any additional funds.
So, it only makes sense when looking for long-term Warren Buffett stocks to buy that you consider companies on the Berkshire Hathaway list that grow their dividends and repurchase shares in a big way.
For the purposes of this article, I’ll be selecting seven companies from at least five different sectors who have repurchased at least $500 million of their stock in the latest fiscal year and $300 million in dividends.
After all, if these stocks are good enough for Warren Buffett, they ought to be good enough for you.
| AAPL | Apple | $146.40 |
| MCO | Moody’s | $261.97 |
| AXP | American Express | $144.36 |
| HPQ | HP Inc. | $26.81 |
| ALLY | Ally Financial | $30.69 |
| KR | Kroger | $44.59 |
| AON | Aon | $282.98 |
Apple (AAPL)
Any list of top long-term Warren Buffett stocks to buy ought to start with Apple (NASDAQ:AAPL).
In the latest fiscal year ended Sept. 25, 2021, Apple bought back $86 billion of its stock and paid out $14.5 billion in dividends. From fiscal 2012 through Q3 2022, Apple bought back $529.1 billion of its stock. Over the same period, it paid out $128.2 billion in dividends.
Apple currently accounts for 41.1% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in Apple is 5.7%, making this iPhone producer by far the holding company’s largest position. Apple ended the third quarter with net cash of $60 billion.
Down almost 20% year-to-date through Oct. 4, AAPL stock is trading at 6.1-times sales, its lowest multiple since 2019.
BofA Global Research analyst Wamsi Mohan recently suggested that the next year could get ugly for Apple if consumers pull back on their discretionary spending. The analyst feels that the spending slowdown isn’t just with low-end consumers, but has spread to a wider group of people.
While that’s a reason to be cautious about your stock purchases, Apple remains a stock to own for the long haul. You shouldn’t be attempting to time the market with this kind of quality stock.
If you have money to invest, buy it.
Moody’s (MCO)
In the latest fiscal year ended Dec. 31, 2021, Moody’s (NYSE:MCO) bought back $750 million of its stock and paid out $463 million in dividends.
Moody’s, best known for its credit ratings business, authorized an additional $750 million in share repurchases in February. That’s on top of the $1 billion approved in February 2021. As of June 30, it had $960 million remaining on the authorization. There is no expiration.
In February 2019, the company entered into an accelerated stock repurchase program. In total, Moody’s repurchased 2.8 million shares at an average price of $180.33. That’s a 45% return over 43 months. A monthly return of 1% isn’t too shabby.
As for dividends, the company has more than doubled its annual payment per share between 2015 ($1.36) and 2022 ($2.80), a compound annual growth rate of 10.9%.
Moody’s currently accounts for 2.0% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in the company is 13.4%. It is the holding company’s 8th-largest position.
The 21 analysts covering MCO stock give it an overweight rating with an average target price of $307.44, 14% higher than its current share price.
American Express (AXP)
In the latest fiscal year ended Dec. 31, 2021, American Express (NYSE:AXP) bought back $7.7 billion of its stock and paid out $1.4 billion in dividends.
The company’s board authorized the repurchase of up to 120 million shares of its stock in September 2019. It does not have an expiration date. Over the past three years, American Express has repurchased 93 million sharesforf $13.1 billion. That’s anaveragee price paid of $140.86 a share. That’s only slightly less than where its stock is currently trading.
Amex currently accounts for 6.8% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in the company is 20.2%. It is the holding company’s fifth-largest position.
In the second quarter ended June 30, American Express announced its revenues increased 31% to $13.4 billion while its net income fell 8% to $2.57 a share. Due to the success of its premium card products, it added 3.2 million new proprietary cards in the quarter.
The company’s management team appears to be more than happy with its quarterly results. As a result, American Express raised its yearly revenue growth guidance from 19% at the midpoint of its range to 24%. On the bottom line, the company maintained its full-year EPS guidance of $9.45.
HP (HPQ)
In the latest fiscal year ended Dec. 31, 2021, HP (NYSE:HPQ) bought back $6.3 billion of its stock and paid out $938 million in dividends.
The company’s board authorized the repurchase of an additional $15 billion of its stock in February 2020. It does not have an expiration. There is $6.4 billion remaining on the authorization.
In 2021, it repurchased 224 million shares at an average price of $28.13, slightly more than where it’s currently trading. HPQ stock is down 30% YTD.
HP currently accounts for 1.0% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in the company is 12.0%. It is the holding company’s 12th-largest position.
Due to share repurchases, HP’s non-GAAP EPS in Q3 2022 rose 4% year-over-year to $1.04, despite its non-GAAP net income falling by 10% in the quarter to $1.1 billion from $1.2 billion a year earlier.
The 18 analysts covering HPQ stock have an average target price of $30.25, 14% higher than its current share price.
Ally Financial (ALLY)
In the latest fiscal year ended Dec. 31, 2021, Ally Financial (NYSE:ALLY) bought back $2.0 billion of its stock and paid out $324 million in dividends.
In January, The company announced that the board authorized a $2.0 billion share repurchase program effective until the end of the year. In addition, it raised its quarterly cash dividend to 30 cents a share, a 20% increase over the previous quarter.
Through the first six months of 2022, Ally repurchased $1.18 billion of its stock at an average price of $42.93 a share, considerably higher than its current share price. It can do better. Hopefully, it was buying in the third quarter.
Ally accounts for 0.3% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in the company is 9.7%. It is the holding company’s 29th-largest position, but certainly finds itself in many investors’ list of top long-term Warren Buffett stocks to buy.
One of the reasons Buffett may continue to own Ally’s stock is its deflated tangible book value per share. At the end of Q2 2022, it was $32.16, down from $38.83 a year earlier, and trading at a discount to its share price.
Kroger (KR)
In the latest fiscal year ended Jan. 31, 2022, Kroger (NYSE:KR) bought back $1.7 billion of its stock and paid out $589 million in dividends.
At the time the company announced its Q2 2022 results in September, the grocery store operator reported that the board authorized a new $1.0 billion share repurchase program. In June, Kroger increased its quarterly dividend by 24% to 26 cents or $1.04 annually. It was the 16th consecutive year increasing its dividend since it was reinstated in 2006.
Through the first six months of 2022, Kroger repurchased $975 million of its stock at an average price of $51.32. That’s 3% higher than the average of its high ($62.78) and low ($42.70) for 2022. That’s a decent, if not spectacular, job of buying back its stock.
Kroger accounts for 0.7% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in the company is 7.3%. It is the holding company’s 17th-largest position.
In early September, Kroger boosted its annual profit forecast on higher prepared food and private label revenues from increased in-home dining. As a result, the company now expects to earn as much as $4.05 a share, up 10 cents from $3.95.
Aon (AON)
Rounding out the list of top long-term Warren Buffett stocks to buy, we have Aon (NYSE:AON).
Aon repurchased $3.5 billion of its stock and paid out $447 million in dividends in 2021. The global leader in commercial risk, health, reinsurance, and wealth solutions, paid an average of $286.82 for each of the 12.4 million shares it repurchased last year. Thanks to 2022’s major correction, it’s a little underwater on those purchases.
The company’s board authorized its first share repurchase program in April 2012 for $5 billion. It subsequently added $22.5 billion in buybacks on four occasions since, the most recent, a $7.5 billion bump in February. As of June 30, it had $7.9 billion remaining on its program.
Since 2012, the company has repurchased 154.1 million shares of its stock at an average price of $127.19, a return on investment of 124%, or 8% compounded annually. A reasonable, if not lights-out, return on its investment.
In August, Aon moved its Chief Operating Officer, James Platt, into the new role of Chief Digital Officer. Platt oversees the company’s Digital Client Solutions. Replacing Platt as COO is Mindy Simon. She comes over from Conagra Brands, where she was the firm’s Chief Information Officer.
Aon continues to build a strong bench of talent. That will be good for shareholder returns down the road.
The company accounts for 0.4% of the Berkshire Hathaway equity portfolio. Berkshire’s stake in the company is 2.1%. It is the holding company’s 25th-largest position.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.