Warren Buffett has always liked stocks. However, there are periods when he's liked 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 stocks in the second quarter of 2024. But one of them still looks like a great pick for income investors.
Image source: The Motley Fool.
Stocks Buffett sold in Q2
Buffett's biggest sale in Q2 was his slashing of nearly half of Berkshire Hathaway's position in Apple. Despite the aggressive selling, though, 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 to sell shares of Bank of America in Q2 and also sold 21% of its stake in Capital One Financial.
The 94-year-old investor reduced Berkshire's position in Chevron(NYSE: CVX) by 3.6% in Q2. He also trimmed the conglomerate's positions in Liberty Media Class A and Liberty Media Class C by less than 2% each.
Other relatively modest sales for Berkshire in Q2 included Floor & Decor, Louisiana-Pacific, and T-Mobile US. However, he completely exited Berkshire's positions in Paramount Global and Snowflake.
Several dividend stocks in the mix
Income investors might say good riddance to some of the stocks Berkshire sold in Q2. Floor & Decor, Liberty Media, and Snowflake don't pay any dividends.
Two others offer paltry 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 appealing 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 has in the past, however, he can't have much to complain about with the big bank's dividend. BofA's forward dividend yield is 2.65%. The company recently increased its dividend payout by 8%.
The no-brainer buy for income investors
There's one stock among those sold by Buffett in Q2, though, that I believe is a no-brainer buy for income investors. Chevron offers a juicy forward dividend yield of 4.58%. The company has increased its dividend for 37 consecutive years.
Chevron could be helped by several factors over the near term. Lower interest rates should boost the U.S. economy, potentially spurring increased oil and gas consumption. The tensions in the Middle East could keep oil prices up.
Looking a little further out, an arbitration panel is scheduled to conduct a hearing next year to address a challenge raised by ExxonMobil(NYSE: XOM) related to Chevron's pending acquisition of Hess(NYSE: HES). Chevron CEO Mike Wirth said in the company's Q2 earnings call that he's confident in a positive outcome from this arbitration.
Assuming Wirth's optimism proves to be 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 lead to higher cash flow and dividend distributions to shareholders.
The demand for oil and gas is likely to remain strong for a long time to come, even with the increased 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 Q2. Chevron wouldn't be Berkshire's fifth-largest holding if he didn't. I think income investors should like this high-yield dividend stock, too.
Should you invest $1,000 in Chevron right now?
Before you buy stock in Chevron, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chevron wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $760,130!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 23, 2024
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 in 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.
