The Best Warren Buffett Stocks to Buy With $300 Right Now

Key Points

• Bank of America brought in $14.7 billion in the last quarter from net interest income.

• Chevron's acquisition of Hess gives it access to a huge oil reserve.

• Kroger's efforts to expand in-store brands are paying off for the mammoth grocery chain.

• 10 stocks we like better than Bank of America ›

Legendary investor Warren Buffett is in the final year of leading his mighty conglomerate, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). The Oracle of Omaha, now 95, plans to retire at the end of the year following a 60-year run that turned a downtrodden textile company into a hugely successful company valued at more than $1 trillion.

Buffett's investing principles are comparatively simple, but not many have been able to duplicate them. He believes in buying stock in companies with outstanding management, a great position in their industry, solid revenue and earnings, and often, a generous dividend. By buying dividend stocks in companies that pay investors to hold them, Buffett and Berkshire Hathaway have been able to build wealth even faster.

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Berkshire Hathaway has long-term investments in dozens of companies, but three stand out right now as ideal companies for anyone wanting to start a buy-and-hold portfolio. And you don't have to be a billionaire to invest like Buffett -- you need less than $300 total to get a share of Bank of America (NYSE: BAC), Chevron (NYSE: CVX), and Kroger (NYSE: KR).

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Bank of America: Buffett's favorite bank stock

Buffett and Berkshire Hathaway have positions in several financial companies. Berkshire owns insurance companies Geico, General Re, and Berkshire Hathaway; stock in credit card companies American Express, Visa, and Mastercard; a stake in the the credit ratings and analytics company Moody's; and a small percentage of Jefferies Financial Group, the investment bank.

But Bank of America is by far the company's biggest bank stock, as Berkshire holds 605.2 million shares for a $31.3 billion stake. Bank of America makes up 10% of Berkshire's entire portfolio. The North Carolina–based financial institution has about 69 million customers and maintains 3,700 locations across the country, as well as a network of 15,000 ATMs and a robust digital presence.

The company has benefited from a period of elevated interest rates that brought in increased net interest income -- the company reported $14.7 billion in net interest income in the second quarter, up 7% from a year ago. And while the Federal Reserve is now starting to lower rates, Bank of America will still be just fine as people begin to take out new loans or refinance mortgages.

Bank of America is also attractive for its 15.2 price-to-earnings ratio and its 2.1% dividend yield.

Chevron: The energy powerhouse

Buffett and Berkshire Hathaway recognize the importance of energy and fossil fuels in today's economy, and the conglomerate has sizable investments in ExxonMobil, Chevron, and Occidental Petroleum.

I like Chevron here. Even though oil prices have been down this year, Chevron still generates a massive amount of free cash flow -- $4.9 billion in the second quarter, up from $2.3 billion a year ago.

The company recently completed its $55 billion acquisition of Hess, emerging victorious over ExxonMobil in a legal battle that saw it win access to the Guyana Stabroek Block that is purportedly the biggest oil discovery in decades with more than 11 billion barrels of oil.

Chevron already recorded record production in the second quarter for the Permian Basin, with 1 billion barrels of oil per day, and I expect production to increase following the Hess merger.

The company pays a generous dividend yield of 4.4%.

Kroger: The defensive pick

Even when spending tightens up and consumer confidence falls, people still need to eat. While consumer discretionary stocks can come under pressure, consumer staples stocks, such as grocery stores, often can be a safer place for investors to put their money. That's where Kroger comes in.

Kroger is the second-largest grocery store chain in the U.S., behind only Walmart. The company has more than 2,700 locations, 2,250 pharmacies, and 1,700 fuel locations scattered throughout 35 U.S. states and the District of Columbia.

The Cincinnati-based grocer reported $33.9 billion in sales in the second quarter, including fuel and specialty pharmacy sales. But without those items, sales were up 3.8% from last year, indicating that people are spending more money in Kroger's grocery stores.

Part of that comes from Kroger's increased emphasis on growing its own in-house brands of food products, which the company can offer at a lower price point and a greater profit than national brands.

Kroger still has a cheap valuation with a P/E ratio of 16.4, which is lower than that of Walmart (38.7), Costco Wholesale (53.5), or Sprouts Farmers Market (26.7). Coupled with a dividend yield of 2.1%, Kroger offers a compelling investment opportunity.

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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Chevron, Costco Wholesale, Jefferies Financial Group, Mastercard, Moody's, Visa, and Walmart. The Motley Fool recommends Kroger, Occidental Petroleum, and Sprouts Farmers Market. The Motley Fool has a disclosure policy.