A dividend aristocrat is a very special thing. It is typically defined as a dividend share that has increased its annual dividend payouts to investors every year for at least 25 years.

Such a long and steady track record shows that a company is financially stable and strong enough to fork out such a large volume of cash consistently.

Over on the US markets, there are many dividend aristocrats. Some you might have heard of include Caterpillar Inc (NYSE: CAT), Exxon Mobil Corp (NYSE: XOM), and McDonald's Corp (NYSE: MCD).

What's more, is that the US markets also boast quite a few dividend kings. These fabled royals of the share market have a 50-year streak of annually raising their dividends. This list is a lot smaller but includes Coca-Cola Co (NYSE: KO), Colgate-Palmolive Company (NYSE: CL), and Altria Group Inc (NYSE: MO).

Does the ASX offer any dividend aristocrats?

Unfortunately, here on the ASX, we have no dividend aristocrats by the US definition. Let alone dividend kings.

But we do have a couple of ASX dividend heavyweights that come close. And they are two shares that I think any investor could comfortably buy and hold for the long term.

The first is Brickworks Limited (ASX: BKW). Brickworks is a building and construction materials company. But it also has a few other earning streams, including from its lucrative property business.

Brickworks has a strong dividend track record. It hasn't raised its dividend for 25 consecutive years, so we can't call it an official dividend aristocrat.

But what it does have is a 45-year history of not cutting its dividends. In other words, Brickworks has either maintained or increased its annual dividends every year since 1976. Definity heavyweight material.

Soul Patts: 3 years to go

The second is Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Soul Patts is the closest thing to a dividend aristocrat the ASX has. No, Soul Patts hasn't quite got to 25 years of annual dividend raises. But it has upped its annual dividend every year since 2000. That means it's only three years away from becoming the ASX's first dividend aristocrat.

Soul Patts is a rather interesting company. It functions more as a listed investment company (LIC) than a traditional ASX business, owning large chunks of other ASX shares in a massive investment portfolio.

This it runs for the benefit of its shareholders. Soul Patts' largest holdings include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), and Brickworks itself.

But Soul Patts also owns a large and diversified portfolio of ASX 200 shares, thanks to the acquisition of ASX LIC Milton Corporation last year. These include your typical ASX holdings like BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).

Both of these would-be ASX dividend aristocrats have a long history of delivering meaningful returns to their shareholders. And both boast unrivalled dividend records on the ASX, if not yet long enough to qualify for the 'dividend aristocrat' tag.

As such, Soul Pattss and Brickworks are two ASX dividend heavyweights that I would happily buy and hold until retirement and beyond.

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Not that Warren Buffett knows too much about retirement. Although the man is now 92 years old, he is still very much not retired and remains chair and CEO of the company he has run for more than six decades, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B).

Some Buffett wisdom for a pending retirement

And Buffett knows a thing or two about obtaining a growing passive income. He bought shares in Coca-Cola Co (NYSE: KO) back in 1988. Coca-Cola is a well-known dividend share over in the United States.

But, as our Fool colleagues over in the US point out, such was Buffett's prowess in finding the right price, he now enjoys a yield on cost of 54% every year.

So this tells us that Buffett only invests in shares that he feels comfortable holding for a generation or longer. Why Coca-Cola? Buffett's love of what he calls an economic moat is probably why. And Coke arguably has more than one. There'd be few people on the planet who wouldn't know what a Coke is for one. But, as usual, Buffett puts it best:

If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I'd give it back to you and say it can't be done.

But Buffett also tells us that it's ok not to go chasing individual shares for an investment portfolio, even a retirement one.

He once said this on index investing:

If you invest in a very low cost index find – where you don't put the money in at once, but average in over 10 years – you'll do better than 90% of the people who started investing at the same time.

So that's the two takeaways we can take from Buffett for a healthy retirement. Buy the best companies at the right price. And if you don't know how, stick with a low-cost index fund.

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Something strange is happening with the iShares S&P 500 ETF (ASX: IVV) this week. Back on Monday, units of this exchange-traded fund (ETF) were trading for almost $600 each. But today, this ETF is going for just $39.07 per unit. It also seems to have a new ticker code.

So has this popular ASX ETF really lost almost 95% of its value this week?

The iShares S&P 500 ETF is one of the most widely-held ETFs on the ASX. It's actually the ASX's most popular internationally-based fund. This ETF tracks the S&P 500 Index (SP: .INX), which is the most widely tracked index in the world.

It represents the 500 largest companies on the US markets by market capitalisation. That includes everything from Apple, Microsoft, and Amazon to Exxon Mobil, Coca-Cola, and McDonald's.

So no, this ETF hasn't collapsed by 95% this week. If the US S&P 500 Index was down 95% in one week, we'd certainly all know about it.

Rather, this ETF has just undergone a stock split.

A stock split for the S&P 500 ETF?

A stock split occurs when a company or ETF decides to increase its share (or, in this case, unit) count. It issues new shares (or units) to existing investors, at the same time diluting the value of the existing shares out there.

This has the effect of lowering the share (or unit) price of the company or ETF, but makes up for this by giving away new shares (or units).

This can be done for a number of reasons. But most do so to boost liquidity and to make it easier for investors to buy and sell shares or units.

At the start of this week, one single unit of the iShares S&P 500 ETF would set an investor back almost $600. That makes it a rather unwieldy investment to have to deal with.

This ETF's provider must have thought so too, because back on 23 November, BlackRock announced that the iShares S&P 500 ETF would be undergoing a 15-to-1 stock split.

That means that for every one unit of this ETF, investors now own 15. Concurrently, the unit price of this ETF has just been reduced by a factor of 15.

So if an ASX investor used to own 10 iShares S&P 500 units, worth $5,860, today, they own 150 units, each worth $39.07. Same value, different path to getting there.

So no investor has been left better, or worse off, from this split. It's just a cosmetic change for all intents and purposes.

Is it IVV or IVVDB?

But what's with the new ticker code? Yes, the iShares S&P 500 ETF used to trade under the code 'IVV'. But today, the ETF has seemingly switched to 'IVVDB'. Well, this is a temporary situation.

As we covered last week, part of the stock split process involves the ETF trading under a 'deferred settlement' basis. So today, the 'IVVDB' units represent the deferred settlement units.

This will only be in place until 13 December. That's when the deferred settlement period will have concluded and the ETF reverts to its old 'IVV' code.

The IVVDB units will seamlessly be converted into IVV units when this happens. So if you're desperate to buy the newly-split ETF today, don't let the new code hold you back.

The post Is the iShares S&P 500 ETF (IVV) really down 95% today? appeared first on The Motley Fool Australia.

After taking over Berkshire in the mid-1960s, Buffett transformed the textiles company into a diverse powerhouse, owning many businesses outright and with significant investments in many other public companies.

Buffett's love of his investments is also well known. He even likes to remind shareholders of his commitment to the Coca-Cola Co (NYSE: KO) by typically sporting a can or a bottle at Berkshire's annual general meeting every year.

Berkshire Hathaway's massive portfolio

Berkshire owns stakes in more than 50 different publically-traded shares. But it might surprise investors to learn that almost 74% of Berkshire Hathaway's public investing portfolio is concentrated in just five companies. That's according to the company's latest 10Q filing, which is accurate as of 30 September.

Some famous names appear in Berkshire's list. There's Amazon.com Inc (NASDAQ: AMZN), Johnson & Johnson (NYSE: JNJ) and Visa Inc (NYSE: V). Buffett also owns chunks of Activision Blizzard Inc (NASDAQ: ATVI), Chinese electric vehicle manufacturer BYD Co Ltd and the relatively new-to-the-markets Snowflake Inc (NYSE: SNOW).

But none of these companies even come close to Buffett's top five holdings.

They are (from largest):

1. Apple Inc (NASDAQ: AAPL)
2. Bank of America Corp (NYSE: BAC)
3. Chevron Corporation (NYSE: CVX)
4. Coca-Cola Co
5. American Express Inc (NYSE: AXP)

So what can we learn from this?

What can we learn from Warren Buffett?

Well, a few things to point out. Some of these holdings, namely Coca-Cola and AmEx, are old Buffett favourites. Buffett first bought Coca-Cola shares back in the 1980s. His investment in American Express goes back even further to the 1960s.

But others are far newer. Apple is by far Berkshire's largest investment. The company has more than US$128 billion worth of Apple shares, which carves out a whopping 39.7% of Buffett's entire public portfolio. Yet Buffett only began buying Apple shares back in 2016. His Chevron stake is even newer, with Berkshire picking up its first shares in the midst of COVID-ravaged 2020.

So Buffett is clearly an investor that holds onto his favourite shares through thick and thin. American Express is a company that has had many, many ups and downs since Buffett first bought in back in the '60s. Yet Buffett has always stayed the course. Ditto with Coca-Cola.

But he is also an investor who knows how to jump on a trend. Buffett clearly saw the post-COVID collapse in global oil prices as an incredible opportunity.

It only took him two years to build Chevron into Berkshire's third-largest position – one worth US$31.2 billion today. And Apple has gone from absent to Berkshire's largest holding in just a few years as well.

So Warren Buffett is clearly an investor who likes to hold his favourite shares forever. But he is also one that isn't afraid to jump on a trend or a new idea and quickly build it into a sizeable position.

Perhaps above all, Buffett's Berkshire portfolio shows that he is just fine with having 40% of his portfolio in his favourite company: Apple. There are more than a few lessons we mere mortals can take away today.

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A strong bull market for many years may have given some investors the misimpression that everything goes up. For some period of time, that's pretty much what happened, with some growth stocks skyrocketing in price with percent gains in the thousands. It looked easy, because it was. 

Many new investors never experienced a bear market, but many of those early gains have now been completely wiped out. It turns out that it may not be so easy to accumulate wealth overnight or over months.

One consistent voice of reason through decades of ups and downs is guru investor Warren Buffett, who has beaten the market through his value-oriented approach. It's always worthwhile to listen to what he says, but in this kind of market it makes even more sense to make note of what he looks for in a stock. There are several factors that inform his decisions, but there's one that stands out in how he defines a great business.

What is a moat?

Buffett says, "A truly great business must have an enduring 'moat' that protects excellent returns on invested capital." The "moat" he talks about refers to a competitive advantage that makes the business unique and better than others. In a literal sense, a moat protects a castle from oncoming attacks. In the markets, a moat protects a business from challengers.

There are several parts of this formula. One is that the moat has to be enduring. If it's not, it's not really protective. It also has to protect excellent returns on invested capital, which means those need to be there in the first place. If a company seems differentiated but is not performing and posting excellent results, the business will fall apart despite any seeming advantages.

Some excellent examples

Buffett goes on to say:

The dynamics of capitalism guarantee that competitors will repeatedly assault any business "castle" that is earning high returns. Therefore a formidable barrier such as a company's being the low-cost producer...or possessing a powerful worldwide brand...is essential for sustained success. 

He gives several examples. Geico (owned by Buffett's holding company, Berkshire Hathaway) and Costco Wholesale both operate a discount model that is compellingly better than competitors. That's a moat, because they are both hard to challenge.

As for a powerful, global brand, he cites Coca-Cola as an example. Despite years of taste-testing and debates about whether or not Coca-Cola is better than your local off-brand, Coca-Cola can demand high pricing, and loyal customers respond. Coca-Cola remains the largest beverage brand in the world by sales, and its unbeatable brand is a robust sales generator, driving excellent returns on invested capital.

Buffett also mentions American Express as having a moat in its powerful brand. It has a premium image with real perks that attract an affluent clientele. Other credit card companies that cater to a wider mix of customers do not carry the same cachet. 

Stronger moats lead to better stocks

Finding businesses with real moats can lead to higher long-term gains. Buffett made these remarks over 15 years ago, and the examples he mentions have indeed endured. Coca-Cola and American Express remain two of his top holdings, and they have been posting outstanding results in an otherwise slumpy market and volatile economy. Their brands have endured over time and look to carry their companies well into the future. Buffett sold his position in Costco in 2020, but it also remains a top stock. Although only Coca-Cola stock is showing a gain so far this year, all of these stocks are beating the market.

AXP data by YCharts

A strong moat is a mark of a great business. Building one takes an excellent business, a competitive advantage, and the ability to strengthen that advantage over the long term. Shifting your focus to investments that demonstrate these qualities, instead of looking for the next hot growth stock, can lead to more successful long-term investing.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There's a reason so many investors want to own Warren Buffett stocks.

The so-called Oracle of Omaha has trounced the market in his long history an investor. Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has nearly doubled the annual return of the S&P 500 for nearly 60 years, and thanks to the magic of compounding, that means Berkshire has returned more than 100 times what the S&P 500 has in that time frame.

Luckily, for investors, Warren Buffett's playbook is wide open, and he's made it clear what kinds of stocks he favors. Here are five simple questions to ask to determine if a stock would get the Buffett stamp of approval.

1. Does it have an economic moat?

Buffett's favorite concept in all of investing may be the "economic moat," or what most investors call a sustainable competitive advantage. Buffett once said, "The most important thing [is] trying to find a business with a wide and long-lasting moat around it, protecting a terrific economic castle with an honest lord in charge of the castle."

As he alludes to in that statement, this key attribute protects the company from competitors. Buffett likes stocks with well-known brands such as Coca-Cola or Apple; companies with limited competition and barriers to entry, like the railroad BNSF that he acquired a decade ago; or companies with strong market share and recurring revenue, like GEICO.

If you want to know if it's a Buffett stock, ask yourself if the company can withstand competition over a long period of time.

2. Does it produce cash?

Buffett doesn't generally waste his time with unprofitable growth stocks. He looks for companies that generate cash. 

Buffett likes to own businesses like insurers that produce cash in premiums that come in advance of claims. He refers to this as a "float" that allows him to reinvest that cash in stocks. He also likes sectors such as energy (for example, Chevron stock), which generate high levels of cash flow when oil prices rise. Buffett's a fan of banks and financial companies like Bank of America and American Express that have reliable profit generation from commercial lending, and he's known to invest in utilities and healthcare, which tend to generate steady cash flows.

What you'll find among almost every Buffett stock is that they produce reliable cash flow, and many of them pay a dividend. 

3. Does it have a long track record? 

Warren Buffett doesn't generally chase the latest trends whether they be dot-com stocks in the 1990s or cloud software stocks more recently.

Instead, he prefers to own companies with long track records and operating histories. Often, he's studied these companies for years, or is well-acquainted with their brands. With Coca-Cola, for example, he had seen its success for 50 years before becoming an investor. When Buffett decided to invest in tech, he bought stock in IBM, because he'd followed it for decades and understood the business. While that investment didn't pan out, it nonetheless reflects Buffett's approach of studying a company for a long time.

Similarly, in financials, he prefers legacy banks over fintech, because banks have proven their business models over long periods of time. Not only are they less risky, but they also generate reliable cash flow.

4. Does it outperform in bear markets?

Historically, Berkshire has best demonstrated its fortitude during bear markets. Buffett hoards cash to buy stocks when they're cheap, and he's known for taking advantage of sell-offs like during the financial crisis when he took a high-yielding stake in preferred stock in Bank of America. Berkshire has also outperformed the stock market by a wider margin in bear markets, including this year.

Because many of Buffett's favorite stocks have stood the test of time, they tend to do well in bear markets, and many of his favorite industries -- including consumer staples, insurance, utilities, and healthcare -- are known for being recession-resistant.

Buffett doesn't exclusively buy recession-proof stocks. He owns cyclical stocks in industries like energy, banking, and industrials, but in general, he prefers to buy stocks that can outperform in bear markets or at least have demonstrated an ability to recover from them.

5. Is it a good value?

Finally, Buffett is a classic value investor. He wants to buy stocks that are trading below their intrinsic value, which is typically estimated with a discounted cash flow model.

The quality of the company is more important to the Berkshire chief than the price. He has famously said, "It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

However, if he finds a stock he likes, he'll only buy it if he believes it's a good value at the current price. In the bull market during the 2010s, Buffett often lamented that stocks had become too expensive. With prices now down, it wouldn't be surprising to see Berkshire deploying its cash hoard, which is currently worth more than $100 billion.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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At a time when inflation is running amok, it's worth taking a lesson or two from longtime investors who've seen it all before.

Consider Warren Buffett's thoughts on the matter. When inflation was rampant in 1977, he wrote, "Our acquisition preferences run toward businesses that generate cash, not those that consume it. As inflation intensifies, more and more companies find that they must spend all funds they generate internally just to maintain their existing physical volume of business."

Not surprisingly, some of Buffett's largest and longest-held positions are excellent dividend stocks. Dividend stocks are focused on cash generation, and that protects their businesses during these inflationary periods. They also provide generous passive income. Some of the best are Coca-Cola (NYSE: KO), Kroger (NYSE: KR), and Procter & Gamble (NYSE: PG). Let's take a closer look at each.

One of the best dividend stocks on the market

Berkshire Hathaway has held shares of Coca-Cola for more than 30 years, and it currently owns 9.2% of the stock. The beverage giant makes up 6.8% of the total Berkshire Hathaway portfolio and is its fourth-largest holding.

Coca-Cola is a classic Buffett stock, mostly because of its focus on cash generation and its dividend, which is really a commitment to its own business. The company is a Dividend King, having raised its payout annually for the past 60 years -- even through the massive sales declines at the beginning of the pandemic.

While the company innovates with new products, its well-oiled business churns out cash through its core brands, giving it enough to plow back into the business while maintaining and growing the dividend. Coca-Cola's payout ratio is presently a bit high at 77%, but the company has tons of cash to cover its dividend, which is super-important to management.

KO Payout Ratio data by YCharts

Coke's shares are down slightly this year. At the current price, its dividend yields 3.1%, which should please new investors.

Big supermarkets, lots of cash

Among U.S. supermarkets, Kroger comes in third in size after Walmart and Costco Wholesale (leaving out Amazon as a different kind of business). But unlike the other two, it doesn't follow a discount model; rather, it offers a premium experience through its network of 2,800 stores.

Over the past few years, Kroger has benefited from customers spending on essentials, and it has revamped its digital channels to handle more demand. Revenue has climbed in this environment. 

It's been in the news lately as it has proposed a merger with the next-biggest U.S. supermarket company, Albertsons Companies. The deal is facing regulatory scrutiny as it would combine the two largest non-discount grocery retailers. If it does indeed go through, the newly merged company will likely overtake Costco as the second-largest food retailer in the U.S.

Buffett first took a position in Kroger in 2019. At that time, it was just getting ready to remake itself. What he might have seen then was a foothold in stability. The company paid a dividend but stopped for several decades before resuming it again in 2006, and it's now a growing a reliable dividend, as are all of the stocks on this list.

KO Dividend data by YCharts

Kroger stock is down just under 4% this year, and at this price, the dividend yields 2%.

A solid business with beloved brands

A theme through all of these stocks is a well-established company with well-loved products that bring in tons of cash. Procter & Gamble is no exception. The company owns popular brands, such as Tide laundry detergent and Bounty paper towels. It makes products that people across the globe use every day and frequently purchase.

Buffett first came to own its shares in 2005 through Berkshire Hathaway's acquisition of the Gillette razor company. Procter & Gamble is another example of a company with slow but consistent growth and the ability to keep producing sales well into the future. 

Inflation has been hitting Procter & Gamble's margins and profits, and volume was down in the company's 2023 fiscal first quarter (ended Sept. 30).

The company has been increasing some of its prices, taking the risk that some customers will head toward discount brands. But management noted that 26 of 50 global brands maintained or increased market share in the latest quarter, which was the first to really reflect high inflation.

It expects profitability to suffer in the near term and is counting on brand power to carry it through. 

The company's stock is down 21% this year, and its dividend yields 2.8% at this price.

KO Dividend Yield data by YCharts

Procter & Gamble is also a Dividend King, and it has one of the longest dividend-raise streaks on the market, at 66 years. It's as reliable as you can get for steady and growing passive income.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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How one allocates their own ASX share portfolio is obviously a very personal decision. We are all different people and investors, with different goals, risk tolerances and personalities. One ASX share might be right for one investor, and wrong for another.

For example, a retiree may appreciate the high dividends that an ASX bank share like Westpac Banking Corp (ASX: WBC) doles out. But a younger investor might wish to go for something with a bit more of a growth profile.

There's no right way to invest when it comes to shares (although there are many wrong ways).

With all this in mind, let's discuss how I allocate my own share market portfolio. As discussed above, this is what works for me, and my own strengths and weaknesses.

Now, I have many many different holdings across my portfolio. So I won't discuss all of them. But I will touch on some theses and strategies that I tend to follow, and explain why.

ASX shares, dividends and franking credits

So to start with, I own a mix of ASX and US shares. This is for many reasons. I love the franking credits and local knowledge that makes ASX investing so rewarding.

But I also love the currency, geographic and economic diversity that comes from investing in the United States. What's more, most of the best companies in the world call the US home.

My selection process is a rather simple one: I look for quality companies, usually with a strong brand, that have demonstrated competency and resiliency over a long period of time.

Let's start with the ASX shares. So I do like a share that pays dividends, preferably those of the fully franked variety. One of my oldest holdings is Telstra Corporation Ltd (ASX: TLS).

I bought Telstra back in 2018 when it was trading for under $2.80 a share. The market hated it then, but I saw a company with a dominant brand providing an essential service. I continue to hold it today for those same reasons.

Another ASX share that is a long-term favourite of mine is National Australia Bank Ltd (ASX: NAB). NAB doesn't have the pricing premium that Commonwealth Bank of Australia (ASX: CBA) does. But I still think it is one of the best-run ASX banks.

My favourite ASX share, though, is Washington H. Soul Pattinson and Co Ltd (ASX: SOL). I've discussed my love of Soul Patts before. But quite simply, it is a diversified market beater with an unmatched dividend record.

Looking across the pacific for my portfolio

Turning to US shares, and again my preference is strong brands and a proven track record. That's why my US shares include names like Apple, Microsoft, Mastercard, Alphabet, Nike and Amazon.

Tesla Inc (NASDAQ: TSLA) is another company that I own. When I first invested in the electric car maker, it was one of my riskier shares. But I have been delighted to see the company grow in size and scale (not to mention value).

Most of my other US shares are within the consumer staples sector. I love the resilience and stability that these kinds of shares can add to a portfolio, as well as the dividends, of course. Among my favourites are Coca-Cola, Pepsi, Starbucks and McDonald's.

Many of these companies have made a habit of raising their dividend every single year, so I have enjoyed watching my dividend income inch up steadily over the years.

So that's my ASX share portfolio in a nutshell and why I own the companies that I do. As I said, it may not be for everyone. But it works for me and my goals. And I sleep soundly every night. What more could one ask for?

The post Here's how I allocate my ASX share portfolio and why appeared first on The Motley Fool Australia.

To repurpose an old television commercial: When Warren Buffett talks, people listen. Buffett is one of the world's richest billionaires and most successful investors. Much of the investment community follows his every move, looking to bring some of the Buffett magic into their own portfolios.

Buffett's moves are particularly interesting as the U.S. faces inflation plus fears of recession. Investors generally want safety in uncertain times. And Buffett, who's seen many flavors of recession, could shed light on where to find that safety.

But Buffett doesn't buy and sell stocks based on what's happening with the economy. He's an all-weather investor -- choosing stocks that can survive all economic climates. That may be why he has 10% of Berkshire Hathaway's portfolio invested in consumer staples, a sector that's known for being recession-resistant.

Consumer staples defined

Consumer staples are essential food, beverage, household, and personal products. Examples are soda, eggs, milk, toothpaste, and detergents.

Consumer staples companies include retailers and manufacturers of these products. On the retail side, you have Dollar General (NYSE: DG), Walmart (NYSE: WMT), Costco (NASDAQ: COST), and their competitors. Consumer staples manufacturers include Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and Kimberly Clark (NYSE: KMB).

Why consumer staples stocks are recession-resistant

A look at your own buying habits can demonstrate why consumer staples stocks don't tank in recessions. With inflation running hot, where have you cut back to make ends meet? You're probably spending less on things like electronics and designer clothes. You may have even canceled a streaming service or two.

But you are still buying toilet paper, deodorant, and bread, even as the prices on these goods rise. On top of that, you may have shifted some shopping to discount retailers like Walmart, in lieu of your more expensive local market.

Here's what it comes down to. People keep buying their staples. Demand for these essential goods doesn't drop off when the economy goes sideways.

Buffett's consumer staples stocks

Berkshire Hathaway owns five consumer staples stocks:

1. Coca-Cola
2. Kraft Heinz (NASDAQ: KHC)
3. Kroger (NYSE: KR)
4. Mondelez International (NASDAQ: MDLZ)
5. Procter & Gamble

Where to find consumer staples stocks for your portfolio

Buffett's consumer staples portfolio is interesting, but you don't want to run out and copy it. Even Buffett himself would tell you: A better approach is to invest in what you know -- specifically, the products, brands, and retailers that are essential to you.

This is easy to figure out, too. Look at your last grocery receipt. Cross off everything that's nonessential and see what's left. Or peek into your pantry and bathroom cabinets. Note the brands you buy repeatedly. It could be Colgate or Charmin, for example. If you see mostly generic goods, then where are you buying them?

You could also think back to the products that kept selling out during the Great Lockdown of 2020. (In my community, it was toilet paper, disinfectants, and chicken.) People stockpile the stuff they can't live without. And many of these staples are made or sold by public companies.

Spend a few minutes on this exercise, and it could reveal six or more recession-resistant stocks to consider for your own portfolio.

Recession defense, the Buffett way

Many investors use consumer staples stocks as a defensive strategy against recession. To follow Buffett's approach, though, you'd invest in defensive stocks you're willing to hold for decades. That's different from owning shares of Coke or Walmart temporarily because financial pundits are predicting recession.

In other words, play defense consistently. Manage to a risk level you can handle in all investing climates. Buffett has 10% exposure to consumer staples, for example, but you might prefer 5% or 15%. Whatever your number is, stick with it. That way, you won't be scrambling to adjust to every market shift. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There's a reason Warren Buffett is often regarded as one of -- if not the -- greatest investors to ever live: He's very good at it. Tens of billions of dollars good. Due to his success, people often look to his portfolio (via his company Berkshire Hathaway) to influence many of their investing decisions.

Berkshire Hathaway's portfolio is loaded with blue chip stocks, including its top three holdings: Apple, Bank of America, and Coca-Cola. They each represent 41.3%, 10.2%, and 7.2% of Berkshire Hathaway's portfolio, respectively (as of March 31, 2022).

If you're wondering why a company with 50+ holdings has 58.7% of its portfolio in three stocks, it's because blue chip stocks have stood the test of time and proven to be great long-term investments, regardless of broader economic conditions.

Blue chip companies find a way to survive

For a company to be considered blue chip, it must be worth billions and be one of the top leaders in its sector, and you don't usually get to that point unless you have lots of resources. Resources that come in handy during bear markets, recessions, and everything in between. Warren Buffett has always preached long-term investing, and part of that is understanding that rough economic times are inevitable, and if companies can't survive those, they're likely not very good long-term investments.

Since the 1980s, Apple, Bank of America, and Coca-Cola have made it through Black Monday (1987), the dot-com bubble crash (late '90s/Early '00s), the Great Recession (2008), and the early stages of the COVID-19 pandemic (2020). Not only have they made it through, but they've also been valuable investments since then.

During the dot-com bubble in 2000, Apple traded at around $150 (the price at the time, not today's price after stock splits through the years) and dropped as low as $13 in 2002. It's since provided some of the greatest returns we've ever seen in stock market history.

From November 2006 to March 2009, Bank of America's stock dropped over 94%. Over the next decade, the stock increased by more than 750%. In early 2020, Coca-Cola saw its stock price plunge by more than 36%. In the little over two years since then, the stock has increased by more than 60%.

Keep your eyes on the long-term prize

It can be hard to convince yourself to focus on the long term when you're seeing your portfolio drop right before your eyes during bear markets and rough periods in the stock market, but it's necessary. If you're investing for the long term -- and you should be -- you have to believe the companies you're investing in will find ways to adjust to the times and produce great results in the long run.

One thing that Apple, Bank of America, Coca-Cola, and lots of other blue-chip companies have in common is they find a way to adapt to broader economic problems they didn't themselves create. Apple didn't cause the dot-com bubble, Bank of America wasn't the main culprit in the Great Recession, and Coca-Cola didn't cause a global pandemic. Yet each time, they had the resources available to adapt and weather the storm.

That's why, like Warren Buffett, you should rely on blue chip companies to represent the bulk of your portfolio. There's no such thing as a foolproof investment, but blue chip stocks are as good as it gets.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Inflation is on the minds of investors, policymakers, and everyday Americans. We can feel it at the pump, at the grocery store, the post office, and even the barbershop. Since inflation is higher than the rate of economic growth, the real gross domestic product for the first quarter of 2022 decreased by 1.4% year over year. If we get another negative reading for the second quarter, the US economy will officially be in a recession.

Both Warren Buffett and Charlie Munger spoke about inflation at Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) annual shareholders' meeting on Saturday. Here's what the longtime chairman and vice chairman said and how they're positioning Berkshire to ride out the storm.

An unavoidable consequence

Buffett and Munger both spoke negatively about the state of the economy due to inflation and how it is largely a result of loose fiscal and monetary policy. This policy artificially inflated demand and effectively caused a supply/demand imbalance -- the cure for which was rising prices to try and lower demand. And now, the remedy seems to be raising interest rates to try and reduce demand. "We are seeing an unleashing of the fact that we just mailed a lot of money one way or another," said Buffett.

However, Buffett and Munger view inflation as a necessary consequence to get the US out of what could have been a COVID-19 induced depression.

"We've had a lot of inflation, and it was almost impossible not to have it if you're going give out the kind of money we gave out. And it's probably a good thing we did it, in fact, I think at one point when the Federal Reserve was creating the money, if they hadn't done it our lives would be worse, a whole lot worse. Now that was an important decision," said Buffett.

In another exchange, Munger said, "It happened on a scale this time that we've never seen before. Those checks are just mailed out to everybody who claimed to have a business and claimed to have employees. They probably drowned the country in money for a while, and as you [Buffett] say, they probably had to do it."

"In my book, Jay Powell [chair of the US Federal Reserve] is a hero," Buffett responded. "It's very simple, he did what he had to do."

Find value wherever it's available

One way of growing wealth during inflationary times is looking for opportunities that aren't otherwise available. The trick is having plenty of experience looking for those opportunities in other economic conditions, too. "We depend on mispriced businesses through mechanisms where we aren't responsible for the mispricing of them," Buffett said.

Buffett surprised investors when he disclosed a roughly 9.5% stake in Activision Blizzard. The stake is worth about $6.2 billion as of Friday's close. Buffett owned about $1 billion of Activision before Microsoft announced it would acquire it for $95 a share. Buffett then increased Berkshire's position as a classic arbitrage opportunity under the assumption that Microsoft is a reliable buyer and would come through on the deal. That arbitrage opportunity is sizable, considering Activision Blizzard's stock is currently $75.60 per share.

Buffet's Activision Blizzard play is merely an old-school way of finding value in a challenging market. However, regular investors should probably steer clear of these kinds of investments, as the deal isn't based on fundamentals and could fall through. You don't want to end up owning a company you don't understand and didn't really want in the first place.

So what can you do?

Learn from Buffett's actions

It's all good and well to say that inflation is unavoidable. But the real question many investors are probably wondering about is how to position their portfolios for prolonged inflation.

First off, it's important to remember that economic cycles are simply par for the course in a long investing career. Whether inflation is the cause of a sell-off or not is secondary. The bigger takeaway is that a bear market can create life-changing wealth for investors in companies with bright futures, positive cash flows, and durable balance sheets.

What Berkshire is showing through its actions is an increased buying appetite that we haven't seen in years, which indicates Berkshire is finding value -- mainly in the energy sector. In less than a year, oil and gas went from a minor allocation to a major one. Berkshire's Chevron holding has pole-vaulted to its third-largest position, while Occidental Petroleum has been a top 10 holding since Berkshire increased its stake in February and March. Berkshire also took a stake in HP this year, and its acquisition of insurer Alleghany shows its classic value stock bent.

Chevron is known for its industry-leading balance sheet and a low cost of production that allows it to reach breakeven free cash flow even when oil is in the low $40s per barrel. Meanwhile, Occidental Petroleum is a much more aggressive spender and has a higher breakeven than Chevron. But its relatively high capital expenditures have paid off now that oil and gas prices are at eight-year highs. Meanwhile, Berkshire's other major positions are in diversified large companies like Apple and Coca-Cola, which is one of the most recession-resistant and reliable sources of passive income on the market.

Treading carefully in a challenging market

All told, Buffett's actions show that Berkshire is finding value in the market, more value than it has found in years. But that Berkshire isn't just buying the dip on any company. It is selectively buying companies that are contributors to inflation (upstream producers like Occidental) or have relatively reliable cash flows and inexpensive valuations (like Chevron and HP).

For investors who don't manage billions of dollars in assets, sticking with unstoppable stocks you'll want in your corner if the market crashes can be a great way to rest easy at night and endure the gauntlet of a bear market.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett is well known as one of the world's all-time great investors. He made his fortune as a value-focused investor -- someone who looks to buy stocks when they're cheap and profit as they recover. As the recent market downtrend reminds us, that's often easier said than done, as falling stocks tend to make it feel like your money is evaporating with every down day.

Still, if Buffett's success shows us anything, it's that a strong company that survives a down market can often come out the other side in a much better spot to deliver solid long-term returns for its shareholders.

With that in mind, we asked three successful investors to pick strong Warren Buffett stocks that are worth considering in today's volatile market. They picked Coca-Cola (NYSE: KO), Visa (NYSE: V), and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). Read on to find out why and decide for yourself whether those companies deserve a spot in your portfolio.

Volatility goes better with Coke

Barbara Eisner Bayer -- Coca-Cola (NYSE: KO): If anyone knows how to make money in all markets, including volatile ones, it's Buffett, the famous nonagenarian who has an approximate net worth of $114 billion. And one of the Oracle of Omaha's favorite stocks is his oldest stock position, which he started purchasing 34 years ago -- The Coca-Cola Company.

Buffett is so in love with the company that he's known to consume five cans of Coke each day. He even joked to Fortune magazine back in 2015 that his body is made up of "one-quarter Coca-Cola". It's no surprise, then, that Berkshire Hathaway owns about $22 billion worth of its shares, or 10% of the company.

It's great that Buffett is so fond of Coke, but that in and of itself doesn't make it a great buy for a volatile market. So let's look at what does.

First, Coca-Cola's products are consumed worldwide and embrace more than its fizzy namesake drink. Its portfolio of beverages has expanded to include changing and healthier tastes, and according to the company, includes "200 brands and thousands of beverages around the world from soft drinks and waters, to coffee and tea." You've probably heard of many of them: Dasani, Fairlife, Fanta, Fuze Tea, Schweppes, Powerade, Smart Water, and Minute Maid. Because these drinks are worldwide staples, people aren't going to stop drinking them when the stock market goes on a wild ride.

The company has survived extreme volatility in the past. Back in October 2018, during an extremely turbulent period, Coca-Cola was up 2% while the S&P 500 was down 9%. This happened because the company was, and continues to be, a huge, stable conglomerate with a solid dividend and continuing growth prospects.

While the company struggled during the coronavirus pandemic, it has finally returned to growth. During its recent fourth-quarter 2021 earnings report, Coca-Cola said net revenue had grown 10% year over year and earnings per share (EPS) were up 65% per share. And management sees brighter days ahead: 2022 revenue growth of 7.5% and EPS growth of 9% are numbers investors can get excited about for such a stable company.

But the cherry on top of these reasons why Coca-Cola is a great Buffett stock to own during volatile times is its dividend, which currently offers investors a 3% dividend yield. Coca-Cola is also a Dividend Aristocrat and has been raising its payout for 59 years in a row. If stocks start plummeting, investors will still be earning income from the dividend, which is vital when all you're seeing is red every day in your portfolio.

If Buffett put down his bottle of Coke and spoke directly to you, he might just say that Coca-Cola -- with its stable business, continuing growth prospects, and mighty fine dividend -- may be the perfect stock to survive and even thrive through volatile times.

The power of plastic

Eric Volkman --Visa (NYSE: V): One of Buffett's favorite sectors -- if not the favorite -- is finance. Witness Berkshire's immense stakes in banks Wells Fargo and Bank of America, for example.

Among this crowd, one company that should continue to thrive no matter how wild global volatility becomes is one of Berkshire's many finance industry holdings, Visa. The payment card processor has a brand that is ubiquitous throughout the world and a business model that continually produces oversize profits.

To understand why, we first have to make the distinction between open-loop card processors and their closed-loop peers. Visa and Mastercard fall into the former category, which essentially means they are payment network operators only, and not card issuers (i.e., the entities such as banks that actually extend the credit on a credit card, or draw funds from an existing account in the case of a debit card).

This contrasts with closed-loop card companies, most prominently American Express (a longtime Buffett favorite, by the way). These entities act as both the issuer and the network operator.

There are pluses and minuses to both business models, but I tend to favor the open-loopers. By sticking to facilitating transactions only, a company like Visa is basically a huge middle man, collecting a small piece of every purchase effected through its network. It assumes no credit risk while doing so; that's for the issuer to worry about.

Like any effective middle man, Visa's profitability is sustainably and consistently high (lately it's boasted 50%-plus net margins).

And as the world keeps moving away from cash into plastic and digital means of payment, the company's growth engine keeps humming. The card giant's first quarter was typical of its recent performance -- net revenue surged 24% higher year over year, to $7.1 billion, while non-GAAP (adjusted) net income enjoyed a 25% rocket ride to $3.9 billion.

No matter how jittery the world economy gets, people are always going to need to buy things. One of the most popular instruments in doing so, in this increasingly cashless environment we shop in, is a Visa card. This company is going to continue to thrive; you can bet on that.

Why not buy Buffett's business?

Chuck Saletta -- Berkshire Hathaway (NYSE: BRK.A): Imagine a company that was built from the ground up to be exactly the fortress-like investment that Warren Buffett likes to own. Now imagine that with one purchase, you can not only buy shares in a company like that but also hire Buffett and his hand-picked successors to manage it for you.

Believe it or not, you can do just that, with an investment in Berkshire Hathaway stock. Berkshire Hathaway is the insurance and investment conglomerate that Buffett runs. Between the strong insurance businesses, the wholly-owned subsidiaries, and the substantial stakes in solid public companies, it is built like a fortress to withstand tough times.

In addition to the great collection of businesses and world-class investment management team at the helm, you can buy your shares at a reasonable price. Berkshire Hathaway stock recently traded hands at less than nine times trailing earnings and only around 1 1/2 times its accounting book value. That means Buffett's company can be purchased at a reasonable price, making it the sort of thing Buffett himself would be interested in owning.

Of course, even with a great business run by one of the greatest investors of all time, there are risks. In particular, Berkshire Hathaway trades at what looks like a cheap valuation in part because of something known as the conglomerate discount. In essence, large and diversified companies are viewed as less focused and nimble than smaller ones. As a result, the market doesn't often put a rich valuation on companies structured like Berkshire Hathaway.

Still, that's a small price to pay for a chance to own an incredibly strong company at a reasonable valuation in incredibly volatile times.

Great companies in troubled times

Regardless of whether Coca-Cola, Visa, or Berkshire Hathaway ever make their way into your portfolio, they are all certainly strong businesses that are built to survive a tough market and emerge stronger on the other side. That makes them worth considering as investments to help you navigate these volatile times. And with a stamp of approval from no less an investor than Warren Buffett, they certainly deserve every bit of that consideration.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Ah, inflation… It's certainly been the talk of the ASX town over 2022 thus far. The current Russia-Ukraine crisis is dominating the minds of most ASX investors right now. But it's inflation that's likely to remain the dominant investing theme of the year. That's why many ASX investors have been wondering how to make sure their ASX share portfolios are 'inflation proof'. Or at least as resistant as possible to the corrosive effects that rising prices can bring.

So let's check out what one ASX expert reckons is the best way to protect one's wealth against inflation. Intermede Investment Partners CEO Barry Dargan recently spoke to Livewire Markets about how to position an investment portfolio in an era of high inflation.

Inflation is coming

Here's some of what he opened with:

The sort of companies we own are companies that have very strong pricing power and so if we do get into a situation where inflation becomes endemic, as may well be the case, these companies will be able to pass on inflation to either consumers or to their customers…

Many of the companies that we own are actually companies that don't charge anything for their product, so things like social media companies where essentially the people that pay them the money are B2B [business to business]… It's companies buying advertising on their space and you know, that sort of cost can definitely be passed on.

Mr Dargan says that the best kinds of these companies are ones with 'moats' around their business. A 'moat' is a Warren Buffett-coined term that describes a company's intrinsic qualities that protects it from threats. An example of a moat is a strong brand. Such as those that companies like Apple Inc (NASDAQ: AAPL) or the Coca-Cola Co (NYSE: KO) possess. Moats like a strong brand can help a company increase its prices to reflect inflation without losing customers. Or even, as Dargan suggests, do it without the customers noticing.

How does one invest in a high interest rate environment?

But Dargan also warns that central banks around the world may be "behind the curve" when it comes to inflation and interest rates. He is predicting that "we're probably in a slightly more inflationary environment than we were going back the last few years. By which I mean, probably something in the light, in the region of maybe two to 3% annual inflation". This will inevitably see higher interest rates, Dargan warns. Still, he doesn't reckon rates will be "going up to anything like historically high levels".

Going forward, Dargan reckons we will indeed see companies that could be described as 'value shares' doing well over the next few years. He points to banks, oil companies, and miners as some of the businesses that will benefit from a higher interest rate environment. But he also warns that these gains might be cyclical. As such, he argues that investors might do better by just focusing on the companies that "can pass on price and they continue to compound their earnings and grow reliably, annually each year".

Easier said than done, one could say! But that's how one ASX expert is thinking about inflation today.

The post Looking for ASX shares that perform under higher inflation? Read this appeared first on The Motley Fool Australia.

Buffett's biggest position

Betting on banks

These businesses are tasty

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett clearly doesn't like the Robinhood trading platform very much. At Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) annual shareholder meeting in May, the famous investor said that Robinhood has "become a very significant part of the casino aspect, the casino group, that has joined into the stock market in the last year or year and a half." 

That doesn't mean that Buffett doesn't see eye-to-eye with Robinhood investors at times, though. Several of the stocks most widely held by investors on the no-commission trading platform are also in Berkshire's portfolio. Here are Buffett's three favorite Robinhood stocks based on the size of Berkshire's stake in each stock. 

Apple

The second-most popular stock on Robinhood is literally the Apple (NASDAQ: AAPL) of Buffett's eye. Apple is by far the largest holding in Berkshire's equity portfolio. Last year, Buffett said that Apple was "probably the best business I know in the world." 

Why does the legendary investor like Apple so much? For one thing, Buffett has always preferred businesses that generate high margins and return on equity. At Berkshire's latest shareholder meeting, he listed Apple first as one of a handful of "terrific examples" of such businesses.

The Oracle of Omaha also likes that Apple markets "sticky" products. This is a reference to the company's ability to retain customers in its ecosystem built around the iPhone. Companies such as Apple that have loyal customer bases also tend to have strong pricing power. 

It seems likely that Buffett and Robinhood investors will be proven right about prizing Apple stock so highly. The increased adoption of 5G networks should continue to fuel higher iPhone sales. Apple's focus on augmented reality (AR) apps and devices could also pay off handsomely over the next few years.

Bank of America

Bank of America (NYSE: BAC) is without question the most popular bank stock among Robinhood investors. It's also clearly Buffett's favorite bank stock, ranking behind only Apple as the largest position in Berkshire's portfolio.

Buffett has long liked bank stocks, in general, in large part because of their ability to deliver a strong return on equity. However, over the last few quarters he has significantly trimmed Berkshire's stakes in bank stocks -- with the notable exception of Bank of America (BoA). 

There are probably three key reasons why Buffett remains such a big fan of BoA. He respects the company's management team, led by CEO Brian Moynihan. Buffett likely thinks that BoA will continue to generate increasing profits. He also almost certainly views the big bank's strong capitalization as a major plus. 

Those three attributes could very well translate to solid gains for Buffett and for many Robinhood investors. The Federal Reserve Board has already indicated that interest rate increases will be on the way in the not-too-distant future. Bank of America ranks as one of the top stocks set to benefit from these coming rate hikes.

Coca-Cola

Coca-Cola (NYSE: KO) might be a somewhat surprising member of Robinhood's top 100 most popular stocks. The beverage giant hasn't delivered impressive returns in recent years. However, there's no surprise whatsoever that Coca-Cola is a Buffett favorite. The stock ranks as Berkshire's fourth-largest holding.

Buffett thinks so highly of Coke primarily because of the company's strong moat -- the Coca-Cola brand. He understands that most customers won't go for a rival product even if it's priced lower. 

Of course, Buffett also knows that the best businesses are built to last. Coca-Cola, founded in 1892, has been the world's leading soft drink maker for longer than most people have been alive. 

Coca-Cola stock might not deliver the biggest returns for Buffett or Robinhood investors going forward. However, it's still a solid pick and remains a dividend investor's dream. Buffett, who has publicly stated that he drinks five of the company's soft drinks each day, will probably have a Coke and a smile for years to come as those dividends flow in.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Exchange-traded funds (ETFs) can be a great way to easily boost your ASX share portfolios diversification. That's because an ETF can hold dozens, hundreds or even thousands of underlying shares within it. As such, you are technically adding exposure to all such shares when you buy a single ETF.

The most popular ASX ETFs on the market today are index funds – those that track a broad-market benchmark like the S&P/ASX 200 Index (ASX: XJO) However, there are others out there that could prove even better for diversification purposes. Here are 2 such funds:

iShares Global Consumer Staples ETF (ASX: IXI)

This ETF from iShares invests in a basket of companies that all dwell within the consumer staples sector. Consumer staples are goods or services that we humans tend to need, rather than want. As such, companies that sell food, drinks, household essentials and other life basics make up most of the holdings of this ETF. 'Sin stocks' that manufacture vices like alcohol and tobacco are also included. The appeal of this sector rests on this 'essential nature'. Companies that sell consumer staples are arguably likelier to be resistant to recessions, inflation and other economic troubles. That's simply because they are the last things that people tend to stop buying in times of trouble.

This iShares ETF invests in a global basket of more than 90 of these companies. Most of its holdings hail from the United States, with names like the Coca-Cola Co (NYSE: KO), Colgate-Palmolive Company (NYSE: CL), Altria Group Inc (NYSE: MO) and Walmart Inc (NYSE: WMT). But there are other geographies represented too, including our own with the inclusion of Woolworths Group Ltd (ASX: WOW) and the A2 Milk Company Ltd (ASX: A2M).

This ETF charges a management fee of 0.46% per annum.

BetaShares Global Cybersecurity Etf (ASX: HACK)

This ETF from BetaShares invests in an area that's a little different. Cybersecurity is arguably one of the most important industries of the 21st century, and will likely only grow in importance as more and more 'stuff' is done online. That's the trend that this ETF tries to capture.

HACK invests in a basket of global companies all dedicated to cybersecurity efforts. Like IXI, many of its holdings are from the USA. But there is still some representation from Israel, Britain and Japan here too. Some of this fund's top holdings include names like Cisco Systems Inc (NASDAQ: CSCO), CrowdStrike Holdings Inc (NASDAQ: CRWD), Zscaler Inc (NASDAQ: ZS) and Cloudflare Inc (NYSE: NET).

HACK charges a management fee of 0.67% per annum.

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When an ASX investor considers an exchange-traded fund (ETF) for their portfolio, normally the goal is to bring in the market's average return. The whole point of an index fund is, after all, to mimic the market, nothing more, nothing less. But not all ETFs are index funds. That in itself is a source of danger. Remember, beating the market is hard, and most of us statistically don't manage it. That includes active fund managers too.

But one ASX ETF has done a pretty good job. That ETF is the VanEck Vectors Wide Moat ETF (ASX: MOAT).

MOAT is an ASX-listed ETF that tracks a basket of US shares. Not just any or all US share though. This ETF holds a basket of roughly 50 companies that all demonstrate one defining feature: the presence of a moat. A moat is a term originally popularised by the great investor, Warren Buffett. The moat Buffett originally described refers to a companies' intrinsic ability to protect itself from its competition, just as a moat used to do for a castle in days of yore. There are many forms a moat can take, but characteristics such as a strong brand, a cost of stitching away from a company's products or an ability to profitably sell goods or services at the lowest cost on the market are the most well-known.

All of the companies that the MOAT ETF holds display these characteristics. VanEck describes its selection process as "exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar's equity research team".

MOATs float the boat

Here are some of MOAT's current holdings: Facebook Inc (NASDAQ: FB), Coca-Cola Co (NYSE: KO), McDonald's Corp (NYSE: MCD), Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), and Kellogg Company (NYSE: K).

Can you identify what might give some of these MOAT holdings their edge? Well, Facebook is the most dominant social media company in the world by a long shot. Alphabet's Google has a virtual monopoly on internet search, as well as internet videos with its YouTube platform. Coca Cola and McDonald's are two of the world's most dominant food and beverage brands, recognised in almost every country on the planet. Kellogg Co is the name in cereal, with the original Corn Flakes brand. And Amazon is, well, Amazon.

But there is a method in this madness. MOAT has handily outperformed ETFs tracking the ASX market like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) per annum over the past 3 and 5 years.

It has also dominated its own benchmark, the US-based S&P 500 Index (INDEXSP: .INX). According to VanExk, MOAT has returned an average of 16.86% per annum over the past 3 years, and 17.74% over the past 5. In contrast, the S&P 500 has returned an average of 13.73% and 14.28% respectively. The iShares ASX 200 ETF has returned an average of 9.53% and 10.10% per annum over the same periods.

The numbers are clear here: the VanEck Vectors Wide Moat ETF has smashed the market. Especially where it counts: over the long term.

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Exchange-traded funds (ETFs) can be a great tool to use to diversify your portfolio of ASX shares. Whilst there are many ETFs available on the ASX, here are two ETFs to consider today that can add diversification to your portfolio whilst charging relatively low management fees.

iShares S&P 500 ETF (ASX: IVV)

This ETF from iShares charges one of the lowest management fees of any ASX ETF. It will set you back just 0.04% per annum for your position. That equates to $4 a year for every $10,000 invested. The S&P 500 Index (INDEXSP: .INX), which is the index this ETF tracks, holds 500 of the largest companies over in the United States.

The US is home to many of the best companies in the world. And I'm sure most investors would be happy with its top holdings. These include Apple Inc (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Amazon.com Inc (NASDAQ: AMZN). As well as older, blue chip companies like Coca-Cola Co (NYSE: KO), Johnson & Johnson (NYSE: JNJ) and Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B).

As you can probably gather, tech companies form a large block of this ETF. But that could work out to be an advantage for an ASX investor, seeing as tech companies are dwarfed by miners and banks in our own S&P/ASX 200 Index (ASX: XJO).

This ETF also offers a very solid long-term performance track record. It has returned an average of 16.41% per annum for the past 10 years.

iShares Global Consumer Staples ETF (ASX: IXI)

This ETF runs on a slightly different track. It also holds a global portfolio of companies that all dwell in the consumer staples industry. Consumer staples can be loosely defined as any goods or services we can't live without. Think foods, drinks and household essentials, as well as vices like alcohol and tobacco. These kinds of companies can be useful in a portfolio, seeing as demand for their products is not usually affected by adverse economic conditions or changing technology.

Its largest holdings include companies like Coca Cola, PepsiCo Inc (NASDAQ: PEP), Nestle, L'Oreal, Procter & Gamble Co (NYSE: PG) and Colgate-Palmolive Company (NYSE: CL). But there's a couple of ASX companies in there too. These include Coles Group Ltd (ASX: COL) and Treasury Wine Estates Ltd (ASX: TWE).

54% of the Global Consumer Staples ETFs' holdings are US companies. But it also has significant exposure to the United Kingdom, Switzerland, France and Japan. It charges a management fee of 0.46% per annum, and has returned an average of 11.2% per annum over the past 10 years.

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Warren Buffett has been in the headlines this week following the release of the always-anticipated annual letter to shareholders over the weekend.

Mr Buffett's company, the giant conglomerate Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), has a long and illustrious history of investing in a large portfolio of top-quality businesses.

Some of these businesses are completely private, and thus not listed on any stock exchange. These include Dairy Queen, GEICO, Fruit of the Loom and Duracell.

Berkshire's portfolio revealed

But others are publically traded on the share market. Berkshire owns shares in these companies, just like you or I would (although far larger stakes, I'd wager).

Buffett's largest publically-traded positions can be viewed in the annual letter Berkshire released over the weekend.

Here is a list of the 16 largest positions Buffett (through Berkshire) owned as of 31 December 2020 (all figures are in US dollars):

1. Apple Inc (NASDAQ: AAPL) – worth $120.42 billion
2. Bank of America Corp (NYSE: BAC) – worth $31.31 billion
3. Coca-Cola Co (NYSE: KO) – worth $21.94 billion
4. American Express Company (NYSE: AXP) – worth $18.33 billion
5. Kraft Heinz Co (NASDAQ: KHC) – worth $11.3 billion
6. Verizon Communicartions Inc (NYSE: VZ) – worth $8.62 billion
7. Moody's Corporation (NYSE: MCO) – worth $7.16 billion
8. U.S. Bancorp (NYSE: USB)– worth $6.9 billion
9. BYD Co. Ltd – worth $5.9 billion
10. Chevron Corporation (NYSE: CVX) – worth $4.1 billion
11. Charter Communications Inc (NASDAQ: CHTR) – worth $3.45 billion
12. Bank of New York Mellon Corp (NYSE: BK) – worth $2.84 billion
13. AbbVie Inc (NYSE: ABBV) – worth $2.74 billion
14. Merck & Co, Inc (NYSE: MRK) – worth $2.35 billion
15. Itochu Corporation – worth $2.34 billion
16. General Motors Company (NYSE: GM) – worth 2.21 billion

A diversified portfolio of Buffett winners

Some interesting names there. As you may have deduced, Berkshire's area of speciality appears to be financials. Banks, more than any other industry, dominate these holdings with names like Bank of America, Bank of New York Mellon, Moody's and US Bancorp. An old Buffett favourite in American Express is also a financial company, although not a bank per se.

There is a healthy mix of other companies too, though. Chevron is an oil giant, and General Motors and BYD are car makers (GM is the name behind our Holden brand).

Merck & Co and AbbVie are both pharmaceutical companies, whereas Itochu is a Japanese industrial conglomerate. Kraft Heinz is a food giant, whereas Verizon is a telco.

And of course, we have Coca-Cola and Apple, two of Buffett's more famous positions. Berkshire only initiated a position in Apple back in 2016, but you can see how quickly it has risen to become Berkshire's largest position by far. The fact that Apple has risen 385% over the past 5 years wouldn't have hurt either.

The post Warren Buffett's share portfolio revealed! appeared first on The Motley Fool Australia.

Coca-Cola Co (NYSE: KO) just launched drink bottles made out of 100% recycled plastic for North American markets. The soft drink giant's all-recycled bottles will hit store shelves later this month in a handful of markets as a first step in a larger plan.

What's new?

First, drinks under the Coca-Cola trademark brand will hit the market in 20oz 100% recycled PET bottles in California, Texas, and New York. Next month, the same three states will see Dasani-branded bottled water products in fully recycled 20oz bottles, followed by environmentally friendly 20oz bottles for Smartwater products in New York and California this July.

Sprite is also launching recycled bottles this month, starting with a smaller 13.2oz bottle in a slightly different set of target markets, hitting Florida but not Texas. Sprite's trademark green plastic bottles will move to clear plastic, which the company says is easier to recycle, by the end of 2022.

The labels on these bottles will carry a new twist on the familiar recycling message. Consumers will be asked to "Recycle Me Again."

"Our packaging is our biggest, most visible billboard," said Alpa Sutaria, vice president of sustainability for Coca-Cola's North America operating unit. "We're using the power of our brands, leading with Coca-Cola, to educate, inspire and advance our sustainability priorities."

Making a difference

According to Coke's press materials, these launches of recycled bottles in a handful of large markets will reduce Coca-Cola's greenhouse gas emissions by 10,000 metric tons per year. The company will bring the annual use of new plastic 20% below its plastic production in 2018.

Coca-Cola's stated goal is to use at least 50% recycled materials in its global packaging by 2030. The domestic market was not the first geographical target for these new bottles -- Coca-Cola has already introduced similar bottles in 18 other markets, starting in 2018. Recycled materials already account for 94% of the company's North American packaging.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Coca-Cola just launched 100% recycled plastic bottles in North America appeared first on The Motley Fool Australia.