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Top 5 Warren Buffett Stocks To Invest In 2019

In this segment of the Motley Fool Money podcast, host Chris Hill asks Million Dollar Portfolio’s Jason Moser, Hidden Gems Canada’s David Kretzmann, and Total Income’s Ron Gross about the companies they’re most intrigued by this week and why.

Top 5 Warren Buffett Stocks To Invest In 2019: AbbVie Inc.(ABBV)

If you typically don’t invest in healthcare, you might not know that shares in the biopharma giant AbbVie fell out of favor last month, following disappointing news on its solid-tumor cancer drug, Rova-T.

AbbVie had hoped definitive midstage trial data for Rova-T could allow it to file for accelerated approval from the Food and Drug Administration, but unfortunately, the data wasn’t good enoughfor that to happen. Instead, the company will need to wait until results from future trials are available before it submits Rova-T for approval, and that could mean a wait of a year or more.

The setback caused AbbVie’s shares to fall by more than 20%, but it’s far from a deal-breaker for the company. Importantly, the sell-off could be creating a great opportunity to add this top dividend stock to your income portfolio.

AbbVie inherited Abbott Labs’ dividend track record when it was spun off in 2013, so it’s considered a Dividend Aristocrat. It appears to take that badge of honor seriously, because its quarterly dividend has increased to $0.96 from $0.40 since its initial public offering.

Following the drop in its shares, its forward dividend yield has increased to almost 4%. That’s a healthy dividend for any company, but what really makes AbbVie an interesting buy is that its dividend could continue climbing because of double-digit revenue growth. In Q1 2018, sales grew 21% year over year. And since generic biosimilars to its best-seller, Humira, aren’t expected in the U.S. until 2023, there’s plenty of opportunity for investors to own AbbVie and pocket increasingly larger dividend checks.

Top 5 Warren Buffett Stocks To Invest In 2019: Berkshire Hathaway Inc.(BRK.B)

Warren Buffett’s Berkshire Hathaway is already worth nearly a half-trillion dollars. But it’s not crazy to think that the stock could double over the next 10 years. A doubling over a decade requires a compound annual growth rate of just about 7.2%. That’s a little more than one-third of the historical growth rate of both Berkshire’s book value and its stock price.

In other words, Berkshire doesn’t need to hit home runs for the stock to double from here. It just needs to keep doing what it’s been doing. Under Buffett’s leadership, the conglomerate has built up a collection of high-quality businesses with durable competitive advantages that should throw off increasing amounts of cash as time goes on. That cash can be invested in even more high-quality businesses, picked by Buffett or his eventual successors.

Of course, if the broader market goes nowhere over the next decade, perhaps because valuations today are historically high, Berkshire could follow suit and fall short of doubling. But Berkshire’s earnings will likely rise substantially over that time, making the stock more attractive and planting the seeds of future gains.

Top 5 Warren Buffett Stocks To Invest In 2019: Leju Holdings Limited(LEJU)

Leju Holdings Ltd (ADR) (NYSE:LEJU) has gotten some attention over the years because it’s one of China’s largest online and offline real estate companies.

When real estate was hot in China, and the tech firms were rolling out like donuts off a Krispy Kreme line, LEJU was one of the speculative darlings that were getting a fair amount of attention in the U.S.

It still has a $149 million market cap, which isn’t huge, but is decent for a tech start-up.

However, the real estate boom is China has cooled and the government is looking to keep things on the cool side moving forward until it can sort out the strength of the recovery. LEJU is off 65% in the past year as a result.

There are plenty of better ideas out there now to take advantage of China’s long-term growth.

Top 5 Warren Buffett Stocks To Invest In 2019: PDL BioPharma, Inc.(PDLI)

PDL Biopharma stock is up 18% over the last 12 months, a performance that beats the S&P 500index of large-cap stocks. Like Novavax, though, PDL was up a lot more at one point. An attempt to buy Neos Therapeutics that was later abandoned contributed primarily to the stock pullback.

It wasn’t long ago that PDL Biopharma claimed one of the biggest healthcare dividend yields on the market, with the company receiving royalties from blockbuster drugs including Avastin and Herceptin. However, the company’s patents expired, its royalties dwindled, and PDL was forced to eliminate its dividend and try to reinvent itself.

That reinvention effort resulted in PDL Biopharma investing in income-generating opportunities. In 2016, the company bought Noden Pharma, picking up blood pressure drug Tekturna with the deal. PDL’s long-term success hinges on its ability to make more strategic deals that generate solid returns.

PDL Biopharma claims one distinction that few companies can: Its cash stockpile is roughly the same as its market cap. The company reported cash, cash equivalents, and marketable securities totaling $405 million at the end of the first quarter. At the time of this writing, PDL’s market cap is $407 million.   

Top 5 Warren Buffett Stocks To Invest In 2019: International Paper Company(IP)

Despite the misconception, the paper industry is one of the most environmentally friendly and energy efficient industries on the planet. Most pulp is sourced from responsibly managed forests, fibers are often recycled into new products, wastewater is often managed efficiently, and wood liquid wastes from the pulping process provides most of the energy needed for industrial mills. In fact, wood products and wood liquids generated nearly as much electricity in the United States in 2017 as utility scale solar facilities.

International Paper (NYSE: IP) wants to take things even further. The company, a leading producer of cardboard that’s cashing in on online shopping trends, has a laundry list of efficiency goals aimed at helping the business and the environment. That includes increasing fiber recycling an additional 15% (the United States boasts a 64% recovery rate), improving energy efficiency of purchased power by 15% (it generates 75% of its energy from wood wastes on site), and improving water management.

The cost-saving moves should help bolster the company’s already-strong $2 billion in annual free cash flow — cementing International Paper as a blue chip dividend stock. 

Top 10 Clean Energy Stocks To Buy Right Now

Uncertainties in the markets prompted by the recent developments would likely curb investors’ appetite for riskier assets and fuel demand for safe-haven assets like gold.

Over the last month, the Zacks Gold Mining industry has advanced 7% against the S&P 500’s decline of 2.2%.

Additionally, the industry has a trailing 12-month EV/EBITDA multiple of 7.1, lower than the S&P 500 EV/EBITDA multiple of 11.3. The industry’s lower-than-market positioning indicates room for some upside moving ahead.

In order to cash in on the solid growth potential of the industry, we have handpicked three gold stocks that will likely add sparkle to your portfolio.

Besides a favorable Zacks Rank #1 (Strong Buy) or 2 (Buy), these companies have a positive sales forecast for 2018 and 2019. Notably, on a month-to-date basis, these picks have performed better than the broader Zacks Basic Materials sector (including the mining industries). Since the beginning of April, the sector’s growth has outperformed the 0.6% gain recorded by the benchmark index.

Let’s dig a little deeper into these three choices to get a fair idea of their individual strength.

Top 10 Clean Energy Stocks To Buy Right Now: PDL BioPharma, Inc.(PDLI)

PDL BioPharma Inc (NASDAQ:PDLI) is a curious beast. It was initially established as a vehicle to acquire the rights to, or patents on, highly marketable drugs that would ultimately drive income for its investors.

It worked too… for a while. As time marched on, however, drug developers realized they could do for themselves what PDL was doing. Ergo, PDL BioPharma has been struggling for a while now to acquire drugs and marketing rights at prices that left room for healthy dividends. That’s a big part of the reason PDLI stock has fallen from a value of more than $30 in 2006 to a price of only $3 per share now.

The bears may have overshot with their pessimism though. As of the most recent quarterly report, PDL has more cash in the bank than the market cap it presently sports. The former is a whopping $532 million, versus the latter of $462 million.

PDL BioPharma could arguably overpay for a drug and still be money ahead.

Top 10 Clean Energy Stocks To Buy Right Now: Stag Industrial, Inc.(STAG)

Stag Industrial (NYSE:STAG) is a highly respected monthly dividend stock that plays in the single-tenant industrial real estate space. That includes warehouse, distribution and light manufacturing facilities.

At the moment, the portfolio includes 356 buildings in 37 states, spread across numerous industries, including automotive, air freight, containers & packaging, food & beverages and business services, among others. The tenant list is diverse, too, and spread out – the largest tenant (the U.S. General Services Administration) makes up just 2.6% of ABR. Other tenants include XPO Logistics Inc (NYSE:XPO), Deckers Outdoor Corp (NYSE:DECK) and Solo Cup.

While Stag’s dividend increases tend not to take effect until the dividend paid out in August, it tends to announce said increase sometime in the first week of May. The company typically hikes its payout twice a year, though it did keep it to “just”  one increase in 2016.

Top 10 Clean Energy Stocks To Buy Right Now: NextEra Energy, Inc.(NEE)

Few companies have done more to bolster wind power’s share of American energy production than NextEra Energy (NYSE: NEE), which has invested $23.6 billion in wind power in the last two decades. It’s the largest owner of installed wind capacity in the United States with 13,852 MW. The next closest power generator owns less than half of that total.

NextEra Energy is quietly attempting to replicate that success in solar energy, which accounted for roughly 1.5% of American electricity generation in 2017 — where wind power was about 10 years ago. In 2016 the low-carbon utility produced more power from solar than any other company on the planet. It owns about 11% of the country’s installed solar capacity, with plenty more capacity additions planned in the next several years.

The stock has easily outpaced the S&P 500 over the long run and currently rewards shareholders with a 2.8% dividend yield. If you’re looking to cash in on the rise of renewable energy in the United States, then NextEra Energy is an easy place to begin your research.

Top 10 Clean Energy Stocks To Buy Right Now: Teradyne, Inc.(TER)

Teradyne, Inc. (NYSE:TER) is a company that has been around since 1960, and as such, you may not think much of this tech player. Lately, it has mostly been a supplier of automation systems for testing semiconductors, wireless devices and storage systems.

But automation has really come into its own in the last several years, and TER has seized its moment. Its purchase of Universal Robots a few years ago catapulted Teradyne into the 21st century and made it a lead player in collaborative robotics technology.

In a nutshell, these are low-cost robots that are used in conjunction with production workers — helping with packing, assembly, gluing and polishing. You can understand how this is a fast-growing segment of the economy at large. But if you want to see what it means for Teradyne in particular, look at its robots segment, which is set to grow more than 50% in fiscal 2018 according to company guidance.

Industrial automation is undoubtedly the way of the future. And with Teradyne coming into its own lately, it is at the center of that trend. Organic growth is impressive, with double-digit revenue expansion across 2017 and an even better 25% jump in earnings-per-share.

However, the medium-term potential of robotics could be dwarfed by a big-ticket buyout from larger industrial players like Siemens AG (OTCMKTS:SIEGY) or Rockwell Automation (NYSE:ROK) that would send shares skyrocketing.

Top 10 Clean Energy Stocks To Buy Right Now: Visa Inc.(V)

In some ways, this company has the perfect business… a proverbial toll road that consumers use in good times and bad. People never really stop using their credit cards and debit cards, even if they might use them a little bit less in the midst of an economic slowdown.

Visa Inc (NYSE:V) shares themselves have reflected that same consistency, and in a big way. The average annual gain has been 28% for every year since 2009. V stock hasn’t had a losing year since 2010.

But the world of money is changing. What if you believe that technologies like blockchain are poised to supplant actual, government-issued currency?

Don’t sweat it.

Visa certainly isn’t. In fact, CFO Vasant Prabhu made a point of saying late last month he’s very excited about the advent of blockchain and the opportunities that will ensue.