Berkshire Hathaway (BRK.A 0.20%) (BRK.B 0.15%) CEO Warren Buffett has, arguably, cemented himself among the many investing greats. Within the 57 years he is held the reins at Berkshire, he is led his firm’s Class A shares (BRK.A) to an combination return of a scorching 3,641,613%, by means of Dec. 31, 2021. The Oracle of Omaha’s firm has outperformed the broad-based S&P 500 by a lot that it is share worth may fall 99% tomorrow and it could nonetheless be handily outpacing the S&P 500 since 1965.

Whereas there’s a laundry checklist of causes for Buffett’s success, together with his love of cyclical companies and corporations that pay dividends, packing Berkshire Hathaway’s portfolio stuffed with comparatively secure corporations cannot be ignored as a foundational component to his firm’s superior long-term returns.

Berkshire Hathaway CEO Warren Buffett. Picture supply: The Motley Idiot.

Among the many greater than 4 dozen securities presently held in Berkshire Hathaway’s portfolio are 5 exceptionally secure Warren Buffett shares that affected person traders can confidently purchase proper now.

Johnson & Johnson

The primary exceptionally secure Warren Buffett inventory traders can scoop up proper now’s healthcare conglomerate Johnson & Johnson (JNJ -0.01%). Though it is not a big holding in Berkshire Hathaway’s portfolio, it is confirmed to be a gentle moneymaker over the long term.

Maybe the very best facet of healthcare shares is that they are defensive. Regardless of how nicely or poorly the U.S. financial system and inventory market carry out, or how excessive inflation flies, individuals will nonetheless want prescribed drugs, medical units, and healthcare companies. Folks do not cease getting sick simply because Wall Avenue hits a bump within the street. This locations a minimal stage of demand beneath most healthcare shares.

One of many components that makes Johnson & Johnson such a particular firm is its working continuity. J&J has been in enterprise for 136 years, and in that point has solely had 10 CEOs.  Having continuity in key management positions has ensured that strategic visions have been met.

Johnson & Johnson’s working segments play an necessary position in its success, too. Whereas promoting brand-name prescription drugs accounts for many of J&J’s progress and working margins, brand-name medicine solely have a finite interval of gross sales exclusivity. To counter these patent cliffs, the corporate can, for instance, lean on its main medical gadget section that is completely positioned to make the most of an getting older international inhabitants. When one door closes with J&J, a number of tends to open.

Lastly, Johnson & Johnson is about as financially sound as any publicly traded firm on the planet. It is elevated its base annual dividend in every of the previous 60 years, and is one in all solely two publicly traded corporations to obtain the very best credit standing (AAA) from Customary & Poor’s, a subsidiary of S&P International.

Visa and Mastercard

The second and third extraordinarily secure Warren Buffett shares to confidently purchase proper now are fee processors Visa (V -1.43%) and Mastercard (MA -1.60%). I’ve arbitrarily chosen to debate each corporations directly since their working fashions, and subsequently catalysts, are nearly similar.

Like most monetary shares, Visa and Mastercard are cyclical companies. With U.S. gross home product declining in back-to-back quarters (most traders would confer with this as a “recession“), you could be questioning why shopping for into fee processors could be a sensible transfer. The straightforward reply is time. Whereas recessions and financial contractions are inevitable, they do not final very lengthy. By comparability, financial expansions are normally measured in years. Disproportionately lengthy durations of growth are what enable Visa and Mastercard to thrive.

These payment-processing kingpins are additionally No.’s 1 and a couple of within the U.S., the most important marketplace for consumption on the planet. As of 2020, Visa and Mastercard respectively managed 54% and 23% of U.S. bank card community buy quantity.  But, with most international transactions nonetheless being carried out utilizing money, the chance to maintain double-digit progress by means of acquisitive or natural growth can also be there.

As one ultimate word, Visa and Mastercard have shunned lending and strictly caught to fee processing. In doing so, each corporations are avoiding the mortgage delinquencies and losses that will sometimes accompany recessions. Not having to put aside capital for unhealthy loans is what permits Visa and Mastercard to bounce again sooner than most monetary shares.

Picture supply: U.S. Financial institution.

U.S. Bancorp

A fourth Warren Buffett inventory that is terribly secure and may be devoured up by long-term traders proper now’s U.S. Bancorp (USB 0.49%), the mum or dad firm of the extra acquainted U.S. Financial institution.

Like Visa and Mastercard, financial institution shares are cyclical. This implies the current financial downturn and quickly rising inflation have typically elevated mortgage delinquencies and inspired banks to put aside extra capital for mortgage losses. Nonetheless, as a result of financial expansions final significantly longer than contractions, banks like U.S. Bancorp profit from the long-term progress in loans and deposits — i.e., the “bread and butter of banking,” as I prefer to name it.

Talking of the bread and butter of banking, regional banking large U.S. Bancorp has often stood out for its superior return on belongings, relative to different huge banks. Whereas most money-center banks have been lured by riskier by-product investments previous to the monetary disaster greater than a decade in the past, U.S. Bancorp’s comparatively conservative administration workforce averted these pitfalls. Translation: It is bounced again from recessions rapidly, and sometimes in higher form than different giant banks.

U.S. Bancorp additionally deserves credit score for its top-tier digital engagement push. As of the tip of Might 2022, 82% of the corporate’s energetic prospects have been banking digitally. Extra importantly, 64% of mortgage gross sales have been accomplished on-line or through cell app. For some context, solely 45% of mortgage gross sales have been accomplished digitally in the beginning of 2020.  As a result of digital transactions are considerably cheaper for banks than in-person or phone-based interactions, this digital push is permitting U.S. Bancorp to consolidate a few of its branches and decrease its noninterest bills.

Chevron

The fifth and ultimate particularly secure Warren Buffett inventory that traders can confidently purchase proper now’s oil and fuel main Chevron (CVX 1.30%).

Understandably, the concept of shopping for an oil inventory merely will not be palatable to some traders. It was just a bit over two years in the past that the preliminary lockdowns tied to the COVID-19 pandemic despatched crude oil and pure fuel demand off a cliff, which in the end pummeled drilling and exploration corporations. Nonetheless, Chevron is a unique breed of oil firm that was in a position to efficiently navigate its manner by means of a tough patch for the oil trade.

Chevron’s best asset could be its built-in working mannequin. Though it generates its juiciest margins from its upstream drilling operations, the corporate additionally owns transmission pipeline, refineries, and chemical vegetation. Midstream belongings, similar to pipelines and storage, nearly all the time function with fixed-fee or volume-based contracts. In different phrases, working money move tends to be extremely predictable and clear. In the meantime, Chevron’s downstream refineries and chemical operations sometimes act as a hedge to falling power costs.

Moreover, Chevron is in wonderful monetary form, in comparison with different international oil and fuel giants. Chevron’s debt-to-equity ratio is under 20%, and the corporate is nicely positioned to additional pay down debt, increase its already lofty dividend, and repurchase as much as $10 billion in frequent inventory this yr.

If this nonetheless is not sufficient to persuade you that Chevron is a secure long-term funding, contemplate this: On account of diminished capital funding throughout the pandemic and Russia’s invasion of Ukraine, international oil and fuel provide ought to stay constrained for years. That is a optimistic growth for power commodity costs, and in the end drillers.