Is Berkshire Hathaway a safe long term investment?
Over the long term, an investment in Berkshire Hathaway has trounced the performance of the S&P 500 Index. The chart below shows total return, which includes reinvested dividends. So if you look at historical results, you would be very attracted to Berkshire Hathaway, and for good reason.
The Oracle of Omaha famously has a long-term focus. That's how he built his business to last, and that's why it has been so successful for a long time. Berkshire Hathaway has delivered market-beating returns to its long-term shareholders.
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Berkshire's stock performance has generally been solid, increasing at a 9.5% (13.3%) CAGR during 2018-22 (2013-22), compared with a 9.4% (12.6%) average annual return for the S&P 500 TR Index. At the end of June 2023, Berkshire had approximately $166 billion in insurance float.
According to the latest long-term forecast, Berkshire Hathaway price will hit $450 by the end of 2024 and then $500 by the middle of 2025. Berkshire Hathaway will rise to $600 within the year of 2027, $700 in 2028, $800 in 2029, $900 in 2032 and $1000 in 2034.
B Stock Forecast FAQ. Based on analyst ratings, Berkshire Hathaway B's 12-month average price target is $441.00. Berkshire Hathaway B has 5.35% upside potential, based on the analysts' average price target.
Arguably, the biggest drawback to Berkshire stock now is that it will underperform if the market continues to boom. Berkshire shares have performed better in 2021, but they had been underperforming the S&P 500 prior to that – understandably so, given that Buffett has been sitting on an ever-growing pile of cash.
| Year | Prediction | Change |
|---|---|---|
| 2025 | $ 680,416 | 11.61% |
| 2026 | $ 759,439 | 24.58% |
| 2027 | $ 847,640 | 39.05% |
| 2028 | $ 946,085 | 55.19% |
Berkshire Hathaway (BRK.A -1.39%) (BRK.B -1.07%) has proven to be one of the most profitable investments in history. Since 1980, the shares have risen more than 2,000-fold! A $100 investment would now be worth about $250,000.
Class A shares will typically grant more voting rights than other classes. This difference is often only pertinent for shareholders who take an active role in the company. Nevertheless, because of the voting rights, A-shares are often more valuable than B shares.
Warren Buffett, its leader, is one of the most recognized figures in finance, renowned around the globe. There's a good reason for this fame: Berkshire Hathaway stock has been one of the best-performing investments in history, compounding value at market-beating rates for decades.
Why not invest in Berkshire Hathaway?
Berkshire Hathaway doesn't pay dividends
In the comparison to the S&P 500 Index above, the performance figures include reinvested dividends. That is a benefit for the S&P 500, but has no impact on Berkshire Hathaway's performance because the company doesn't pay a dividend.
Since Buffett took control of Berkshire Hathaway in 1965, the stock has trounced the S&P 500. Its compound annual gain through 2023 was 19.8% versus 10.2% for the broader index. But Buffett says those days of market-trouncing returns are behind it.
Going from Buffett's past history, it's unlikely that the company will pay investors a dividend while he remains in charge. There's every chance that Berkshire Hathaway's future CEO also decides against paying dividends, especially given Buffett's track record of creating shareholder value by other means.
Berkshire's 18% year-to-date returns top the S&P 500's 7% gain, and the results grow more eye-popping as the time frame extends: Berkshire's 271% return over the last decade and 50,799% surge over the last 40 years smashes the S&P's 232% and 4,213% respective gains, according to FactSet data.
He owns a small bit of each in his portfolio for Berkshire, too. The two investments held in Berkshire Hathaway's portfolio that Buffett recommends more than anything else are two S&P 500 index funds. The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) and the Vanguard S&P 500 ETF (NYSEMKT: VOO).
These were the stocks Buffett had in his portfolio heading into 2024. Some top picks of Berkshire are Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO) and Chevron Corp (NYSE:CVX).
Berkshire Hathaway has experienced controversy due to its former charitable giving practices. Buffett believed that it was inappropriate for a company to direct its charitable giving to the pet causes of the board of directors.
Anyone can invest in Berkshire Hathaway if they have enough money to buy at least one Class B share (about $360 in late 2023). For comparison, hedge funds are open only to accredited investors, meaning those with a high income or net worth and who can meet the fund's minimum investment, which can be $1 million or more.
Berkshire Hathaway doesn't pay a dividend itself, but the vast majority of stocks that it owns do. Buffett's such a big fan of dividend payers that a majority of Berkshire's holdings are concentrated in a handful of dividend-paying stocks.
Based on 2 Wall Street analysts offering 12 month price targets for Berkshire Hathaway A in the last 3 months. The average price target is $680,000.00 with a high forecast of $715,000.00 and a low forecast of $645,000.00. The average price target represents a 11.83% change from the last price of $608,091.00.
What is Warren Buffett's biggest investment?
Apple is Berkshire's largest public stock holding by far. Berkshire's $155 billion Apple stake is roughly four times larger than its second-largest holding. Buffett first bought Apple shares in the first quarter of 2016, and Apple's stock price is up more than 500% since the beginning of 2016.
- Bank of America (BAC), 1.03 billion.
- Apple (AAPL), 905.6 million.
- Coca-Cola (KO), 400 million.
- Kraft Heinz (KHC), 325.6 million.
- Occidental Petroleum (OXY), 248.1 million.
- American Express (AXP), 151.6 million.
- Chevron (CVX), 126.1 million.
- Nu Holdings (NU), 107.1 million.
Berkshire Hathaway is a diverse holding company with well-known subsidiaries like GEICO and Dairy Queen. The company's top three individual shareholders are Warren Buffett, Susan Buffett, and Ronald Olson. The three main institutional shareholders are Vanguard, BlackRock, and State Street.
| Company name & symbol | Percent change in share count over quarter | Value of investment at end of quarter |
|---|---|---|
| Sirius XM (SIRI) | 316% | $220,129,000 |
| Chevron Corp. (CVX) | 14% | $18,808,080,000 |
| Occidental Petroleum (OXY) | 9% | $14,552,270,000 |
There, Buffett commented that on his death, he's already taken care of taxes and bequests, and all remaining Berkshire Hathaway shares would go to charitable foundations.
