Investment legend and Berkshire Hathaway CEO Warren Buffett recently revealed a massive stake in Chevron. In fact, the oil and gas gorilla is now Berkshire’s fourth-largest publicly traded holding.
Chevron is at the forefront of the energy boom. In 2021, it produced a total of over 1.8 million barrels of oil and natural gas liquids per day. Meanwhile, the company’s free cash flow has surged by more than 1,000% to $21.1 billion over the past year.
Currently, the stock trades at a price-to-cash flow ratio of 10. It also offers a healthy 3.5% dividend yield.
Occidental Petroleum is another big energy bet in Buffett’s portfolio. The Oracle of Omaha added this new position at the start of 2022. Year to date, the stock is up about 97%, so it has worked out well for the billionaire.
Occidental is the largest acreage holder in the highly coveted Permian Basin, with assets concentrated in West Texas and Southeast New Mexico. The company generates a healthy amount of free cash flow — $9.2 billion in 2021 — much of which gets handed back to investors in the form of dividends and buybacks.
OXY has already initiated a $2.5 billion buyback program to reward long-term shareholders. Currently, the stock trades at a still-cheapish price-to-cash flow of 5.
Exxon Mobil is probably the best-known oil stock in the world — for good reason. As one of the largest energy producers in the world (and biggest in the U.S.), Exxon is the definition of a blue-chip giant.
In 2021, Exxon earned $23 billion and generated a whopping $48 billion in operating cash flow. Management also recently initiated a $10 billion share repurchase program.
The stock currently trades at a price-to-free cash flow ratio of 7. Meanwhile, Exxon’s dividend yield still sits at an attractive 4.1%. Investors looking for a solid way to lock in some passive income, while hedging against white-hot inflation, should keep an eye on XOM.
Sign up for our MoneyWise newsletter to receive a steady flow of actionable ideas from Wall Street's top firms.
Get a piece of commercial real estate
More from MoneyWise
- Kevin O’Leary says ‘you’re actually losing money’ in a bank account — do this simple thing with your hard-earned cash instead
- Jim Rogers: Next bear market will be ‘worst in my lifetime’ — he'll rely on 3 assets
- Robert Kiyosaki says we're already in a 'technical depression' — he's using these 3 assets for protection
Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.