Warren Buffett is one of the greatest investors and teachers of our time. The man is all about sound investment over the long term. With the recent speculative frenzy surrounding Bitcoin, sexy IPOs, celebrity SPACs, non-fungible tokens (NFTs) and meme stocks, you can bet that the man is more than willing to observe the mania from the sidelines with zero temptation to get into any one of such dangerously risky places of the market.
Previously, I’d highlighted that Warren Buffett has shown a willingness to adapt with the times. The man’s investment in shares of Apple (NASDAQ:AAPL) is a testament to this. However, Buffett’s willingness to update his investment strategy with the modern times does not mean he’ll eventually give in and place a bet on wildly volatile assets like Bitcoin that remain unproven and unbacked.
Gurus bet big on Bitcoin: Warren Buffett will not be next Warren Buffett said he’d never bet on Bitcoin, and I believe him. Although other gurus, including the likes of Tesla’s Elon Musk, Twitter’s Jack Dorsey, and ARK Capital’s Cathie Wood, are embracing Bitcoin with open arms, I continue to think Buffett and his right-hand man Charlie Munger will continue to slam the cryptocurrency, as nothing has changed about the asset, other than its price, which recently swelled above the US$60,000 mark.
While most others bet on Bitcoin and other “sexy” plays of the times, Warren Buffett will stick with stocks that trade at discounts to their intrinsic value range. With U.S. bond yields swelling above the 1.5% mark, growth is likely to continue taking a backseat to value and dividend stocks. So-called story stocks that won’t see big profits until years down the road, I believe, will be stuck in the penalty box for most of the year, or at least until the 10-year Treasury note yield breaks the 2% mark, whichever comes first.
The case for “unsexy” dividend stocks over “sexy” crypto In terms of dividend stocks, there’s no shortage of value out there. As most speculators pile into Bitcoin and the hottest IPO, there remain baskets of severely undervalued plays that could be poised to spread their wings as the economy reopens for good.
Consider Warren Buffett’s latest bets on Chevron (NYSE:CVX) and Verizon, two top dividend stocks with yields north of 4%. Both plays are “classic” Warren Buffett value plays that are viewed as ridiculously boring through the eyes of the new class of beginner investors who seem more than willing to risk their shirts on YOLO (you only live once) or FOMO (fear of missing out) momentum plays for a shot at quick riches.
While Buffett may seem foolish for having missed out on Bitcoin or Dogecoin’s latest run, he’s more than content with holding onto his Steady Eddie stocks, as they look to appreciate modestly over the coming years.
Warren Buffett’s right-hand man Charlie Munger noted that returns over the next decade could be considerably lower than the last. With prospective returns on the lower end, investors need to either temper their return expectations or increase their risk appetite. Buffett and Munger have chosen the former, and I think Canadian investors would be wise to take a hint from their moves into beaten-down dividend stocks.
Canadian dividend stocks to invest like Warren Buffett On this side of the border, I remain a huge fan of Suncor and BCE stock, both of which mirror Warren Buffett’s bets on Chevron and Verizon. With SU and BCE, you’ll get a nice payout as you look to benefit from two trends that the Oracle (NYSE:ORCL) of Omaha may be betting on. Not only are Buffett’s big oil and telecom bets reeking of value, but they’re also on the right side of “booms” that I think will kick in over the next 18 months.
Chevron and Suncor, I believe, are cheap dividend stocks to play the post-pandemic commodity boom. As for Verizon and BCE, I believe each name is a play on the 5G boom that’s right around the corner. While such Buffett stocks may take a year or two to really pay off, I’d argue that they’re likely to outperform today’s “sexy plays” like Bitcoin over such a timespan.
So, take a cue from Warren Buffett, not the herd, and place a bet on your favourite Canadian dividend stocks today.
The post Warren Buffett: Forget Bitcoin! “Classic” Dividend Stocks Are the Place to Be! appeared first on The Motley Fool Canada.
Fool contributor Joey Frenette owns shares of Apple. David Gardner owns shares of Apple and Tesla. Tom Gardner owns shares of Tesla and Twitter. The Motley Fool owns shares of and recommends Apple, Tesla, and Twitter. The Motley Fool recommends Verizon Communications (NYSE:VZ) and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple.
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