2 No-Brainer Warren Buffett Stocks to Buy Right Now

Berkshire Hathaway (BRK.A -0.46%) (BRK.B -0.49%) CEO Warren Buffett is a legend within investing circles, and for good reason. Over the past 57 years, Berkshire has delivered a compound annual return of 19.8% versus 9.9% for the benchmark S&P 500, thanks to Buffett’s stock-picking acumen.

Which Buffett stocks stand out as no-brainer buys right now? Occidental Petroleum (OXY -0.60%) and Coca-Cola (KO 0.21%) are two names that should deliver solid returns for shareholders in 2023 and beyond. Read on to find out more about these two core Berkshire holdings. 

Warren Buffett.

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1. Occidental Petroleum 

Occidental Petroleum is an international energy and chemical manufacturing company. Following its latest purchase, Berkshire now owns approximately 22.4% of Occidental’s outstanding shares, making it one of the diversified holding company’s top 10 holdings.

This energy and chemical manufacturer is a solid stock pick because of the company’s strong fundamentals, top-notch shareholder rewards program, and attractive valuation. Keeping with this theme, Occidental generated a record $12.5 billion in net income, retired over $10.5 billion in debt, and completed a $3 billion share repurchase program over the course of 2022.

This year, Occidental announced a hefty 38% increase to its dividend to $0.72 per share on an annual basis. As a result, its stock now sports an annualized dividend yield of 1.16% at current levels. While this yield is well below average for the dividend-friendly energy sector, Occidental’s minuscule payout ratio of 4.2% gives the company ample room to beef up its payout in the years ahead. 

On the valuation side, Occidental’s shares are presently trading at a mere 1.8 times 2024 estimated sales. By contrast, energy stocks as a whole trade at an average of 2.5 times forward-looking sales. Occidental stock, in turn, qualifies as a bargain on this key valuation metric.    

2. Coca-Cola

Beverage titan Coca-Cola is currently Berkshire’s fifth-largest holding. Buffett, along with his lead stock pickers Todd Combs and Ted Weschler, have made this beverage company a core holding for one simple reason: Coca-Cola’s enormous branding power gives it a nearly insurmountable competitive moat over the field.  

What’s important to understand is that Coca-Cola’s wide moat enables it to be extremely generous with shareholders. At current levels, Coca-Cola stock pays out an annualized dividend yield of 3.06%, which is well above the 1.74% average among stocks in the benchmark S&P 500.

Buffett, in his latest letter to shareholders, noted that Berkshire’s cash dividend from Coke has grown from $75 million in 1994 to an astronomical $704 million in 2022. He added, “We expect that those checks are highly likely to grow.” That’s a ringing endorsement from one of the best investors in the world.

Apart from its solid dividend and entrenched competitive position, Coke stock is also attractively valued at a reasonable 22.6 times forward earnings. Wall Street analysts, in turn, think this beverage stock could appreciate by a noteworthy 14% over the next 12 months. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.