Warren Buffett has frequently emphasized the importance of believing in America. Investors who buy and hold American stocks have experienced significant wealth growth over the past century, thanks to the country’s economic strength, with a gross domestic product (GDP) now at $30 trillion.
It’s no surprise that Buffett prioritizes American stocks in his investment strategy at Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B). Here are two blue-chip American stocks that currently account for 27.3% of Berkshire Hathaway’s portfolio.
A Long-Standing Premium Credit Card Franchise
Nearly 17% of Buffett’s portfolio is invested in American Express (AXP), a company Berkshire has owned since 1991. American Express leads the premium credit card sector, focusing on travel, dining, and entertainment spending. Over the years, it has built a strong brand, attracting customers willing to pay high fees for access to its network.
With 147.5 million credit cards in circulation and adding over 3 million new cards each quarter, American Express is thriving. After a period of stagnation in the early 2000s, a new leadership team has revitalized the brand, appealing to younger consumers with perks like annual ride-sharing credits on Uber. Spending among these younger users grew 14% year over year last quarter, compared to 7% for the overall business, translating directly into revenue.
These customers tend to have high lifetime values, remaining loyal to American Express for years. Earnings per share (EPS) have surged 159% over the past decade, with growth accelerating post-COVID-19. Buffett appreciates American Express not only for its brand strength but also for its capital returns program, which includes buybacks and dividends. In the last ten years, buybacks have reduced American Express’s shares outstanding by 30%.
All these factors explain why American Express is one of Buffett’s largest holdings and likely a permanent fixture in Berkshire Hathaway’s portfolio.
A Durable Banking Giant
Another key investment for Buffett is Bank of America (BAC), which fittingly has “America” in its name. This stock represents Buffett’s third-largest position (following Apple), with his first purchase occurring in 2011 after the Great Recession when shares were undervalued.
For over a century, Bank of America has been a cornerstone of the U.S. banking system, boasting nearly $3.4 trillion in total assets across consumer banking, wealth management, and global investment banking. If there’s a financial service available, Bank of America probably offers it, evident in its 40 million mobile banking users who have remained loyal over the years.
Buffett is drawn to franchises with long-lasting customer relationships, and Bank of America exemplifies this perfectly. Since the financial crisis, the bank has seen substantial earnings growth, with net income up nearly 2,000% since 2011. Similar to American Express, Bank of America has also reduced its shares outstanding by about 30% in the last decade, enhancing shareholder returns.
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