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Warren Buffett's Defensive Portfolio: Johnson & Johnson and Visa Stand Out
Warren Buffett, the 91-year-old CEO of Berkshire Hathaway since 1965, has built a portfolio of defensive stocks that can withstand economic and market turbulence. Two of these stocks, Johnson & Johnson and Visa, are particularly noteworthy.
Johnson & Johnson, a company that has existed for 136 years and has had only ten CEOs, is one of the most stable companies in the world. It is one of only two publicly traded companies to have received the highest credit rating (AAA) from Standard & Poor's. Johnson & Johnson's size and diversity are impressive, with a wide range of products that include medications, medical devices, and vaccines.
The company is also considered a safe investment during turbulent market times. In fact, Johnson & Johnson has increased its annual dividend for the last 60 years, making it a reliable income generator. As of March 31, 2022, Johnson & Johnson makes up only 0.02 percent of Buffett's portfolio, but its defensive characteristics are well understood in investment circles.
Visa, the world's largest payment processing network, is another defensive stock in Buffett's portfolio. Visa works with around 100 million merchants and operates 3.8 billion cards. In the third quarter of 2021, Visa's revenue increased by 19 percent to $7.3 billion, and its net income increased by 32 percent to $3.4 billion. Visa also pays a dividend, with a current dividend yield of 0.76 percent.
Visa's growth prospects outweigh potential setbacks from recession fears and inflation in the long run. The company's dominant position in the payments industry provides it with strong cash flow, making it less volatile than many sectors.
In addition to Johnson & Johnson and Visa, other defensive stocks in Buffett’s portfolio include Coca-Cola and American Express. Coca-Cola is prized for its reliable dividend and global brand resilience, while American Express is valued for its diversified revenue model supporting stability.
Berkshire Hathaway's Class A shares have achieved a total return of over 3.6 million percent since 1965, demonstrating the success of Buffett's long-term investment philosophy focused on durable competitive advantages and cash generation. The Motley Fool identified five companies in its portfolio as of March 31, 2022, with Johnson & Johnson and Visa being two of the five stable investments.
In conclusion, Johnson & Johnson and Visa are key defensive holdings in Buffett’s portfolio, with Coca-Cola and American Express also notable for their stability and income generation. These stocks are well-suited to weather economic cycles and provide a steady stream of income for investors.
- Warren Buffett's satellite investments in personal-finance powerhouses like Coca-Cola and American Express complement Johnson & Johnson and Visa, providing a diversified approach to his defensive portfolio.
- Technology and lifestyle sectors also find representation in Buffett's portfolio, with Visa's leading position in digital payment networks depicting an insightful foresight into the future of finance.
- Sports enthusiasts might note that the strength and durability exhibited by companies, such as Johnson & Johnson, have the potential to translate into strong returns under the guidance of a skilled investor like Warren Buffett, who favors proven, time-tested strategies for growing wealth.
