This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Key Points
- Apple and Visa make up over a fifth of Buffett's portfolio, although the former has a far larger presence.
- Apple is proving the doubters wrong and showing that its most important segment can still be a winner.
- Visa is well positioned in its industry and sees a huge remaining market opportunity.
Warren Buffett is the most famous investor in the world. Even at 95 years of age and as he is about to step down as CEO of Berkshire Hathaway, the Oracle of Omaha's investing wisdom and stock picks are worth serious consideration by anyone, considering that he has crushed it over the long run.
With that said, let's consider two stocks that feature prominently in Berkshire's $315 billion portfolio: Apple (NASDAQ: AAPL) and Visa (NYSE: V). These two market leaders account for 24.7% of the conglomerate's portfolio; they have made Buffett and his team plenty of money, and it's not too late to invest in them.
Apple -- 23.8% of Berkshire's portfolio
Apple has been Berkshire Hathaway's top holding for years. Many have wondered why, especially since the tech company encountered plenty of headwinds over the past few years: slowing iPhone sales in China, tariff threats, and increased regulatory oversight over alleged monopolist practices.
Buffett has held on (though the conglomerate has decreased its stake) throughout it all. And Apple recently showed why, with a better-than-expected quarterly update. The company's sales and earnings are rising at a good clip thanks to its newer releases, especially the iPhone 16 and the iPhone 17.
Management said there were supply constraints that prevented the company from meeting the demand for those two products. As the company solves this problem, its iPhone sales and overall revenue should continue climbing at a good clip through this cycle of renewals.
So, even though the iPhone franchise is no longer the growth driver it was a decade ago, it is still driving growth in a more mature business that generates far higher sales. And there are plenty of other reasons to consider investing in Apple stock. Here are just two of them.
First, the company continues to grow its installed base. Apple's progress in this area helps strengthen its services ecosystem, which generates high-margin recurring revenue that will rise as its installed base and active paid subscriptions grow.
Second, Apple is a terrific dividend stock, especially compared to most of its peers in the trillion-dollar club. It increased its payouts by 100% in the past decade. The company also has a robust share repurchase plan, and in its fiscal year 2025, ended on Sept. 27, it returned $24 billion through dividends and share repurchases.
Apple has the cash to maintain that pace. It generated $98.8 billion in free cash flow over the trailing-12-month period. The company's capital allocation priorities are another great reason to buy the stock.
Visa -- 0.9% of Berkshire's portfolio
Visa has been part of Buffett's portfolio since 2011, and the shares of the payments leader have soundly beaten the market since then. One major reason is that Visa is helping push the cash displacement phenomenon. Customers are increasingly using credit and debit cards instead of cash.
Visa helps facilitate these digital transactions and charges a fee for each. There are several reasons credit cards have an advantage over cash and checks. First, speed. Card transactions are approved in the blink of an eye. Checks can take longer.
Second, convenience and security. Carrying loads of cash is burdensome and dangerous. And if someone steals it, there is little to do to stop them from using it. Credit cards, on the other hand, are easier to carry and conceal and can be restricted once stolen.
And lastly, digital payment methods are better adapted to our changing world, especially the rise of e-commerce.
All these and more have helped Visa significantly increase its total payment volume, revenue, and earnings over the past decade.
Here's another driver of its success: The company has a strong competitive advantage thanks to network effects. As the number of debit and credit cards with its name and logo grows, it becomes more attractive to merchants to accept them, granting them access to a large pool of potential customers.
Visa practically runs a duopoly with Mastercard, and it still has plenty of growth fuel: There remain trillions worth in cash and checks to bring into its ecosystem. The company should ride this tailwind for years to come.
Lastly, it's also a great dividend pick. Visa has increased its payouts by 378.6% over the past 10 years. In typical Buffett fashion, this is a top stock to buy and hold forever.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
