4 Brilliant Warren Buffett Stocks to Buy Now and Hold for the Long Term

Key Points

• Berkshire Hathaway CEO Warren Buffett has established a strong reputation as a prudent long-term investor.

• The conglomerate often invests in companies with competitive advantages that provide stability and resilience against market fluctuations.

• These businesses tend to have steady, recurring revenue; strong cash flows; and robust balance sheets.

• 10 stocks we like better than Mastercard ›

Warren Buffett is an icon whose influence resonates throughout the investment world. Since stepping into the role of chief executive officer of Berkshire Hathaway in 1965, Buffett has achieved an astounding 20% annualized return on investments. To put that into perspective, a $100 investment in Berkshire back then would have skyrocketed to a staggering $5.5 million today.

Berkshire Hathaway's portfolio serves as a source of inspiration for investors, who can get a glimpse of the moves of the world's most successful investor. If you're on the hunt for Buffett-approved stocks, here are four to own today.

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1. Mastercard

Mastercard (NYSE: MA) operates one of the world's largest payment networks, and it holds a strong market position in the card transaction and payments landscape. In 2023, the company processed $4 trillion in global purchase volume, or a 21% market share. Only China's UnionPay and Visa boast more volume.

The company has built up its payment network since 1966. Today, there are more than 3 billion Mastercard cards in circulation across 220 countries. Its robust payment network has taken time to build up, and it has significant network effects as a result. As more customers and merchants utilize its cards, the network becomes even stronger -- a key reason for Mastercard's staying power.

The company focuses solely on issuing cards and earns a fee for each transaction made with those cards. Importantly, Mastercard does not hold credit card debt, which means it is not exposed to the risks associated with customers who fail to pay their bills or default on their debts.

With its asset-light business model and robust network effects, Mastercard is a solid Buffett stock for the long haul.

2. Moody's

Moody's (NYSE: MCO) plays a key role in markets as one of the leading credit rating companies in the U.S. With a 32% market share, Moody's holds a powerful position in the industry, trailing only S&P Global.

Credit ratings are essential for the financial system, because investors rely on them when purchasing debt instruments such as corporate bonds, municipal bonds, Treasuries, and other forms of debt. This reliance on bond ratings provides Moody's with a steady stream of income, as companies and countries frequently issue debt, requiring ongoing monitoring and credit ratings.

The company heavily relies on debt issuance to drive its business. But it also operates Moody's Analytics, which provides data-driven software tools, risk management solutions, and other services to its clients. This helps diversify earnings and pick up the slack in the business when debt issuance lags.

Given its crucial role in the plumbing of financial markets, Moody's is another solid long-term stock for investors today.

3. American Express

American Express (NYSE: AXP) operates a payment network, similar to Mastercard, facilitating payments between customers and merchants. However, unlike Mastercard, American Express retains the credit card debt incurred by its customers, which is why it is said to operate a closed-loop payment system.

This model does expose the company to credit risk. However, American Express excels at leveraging its strong brand to attract affluent consumers. It offers an appealing rewards program and has cultivated a well-established brand image over the decades. As a result, the company's credit quality is often considered best in class compared to its peers, making it less vulnerable to economic downturns.

American Express's growth is driven by consistent consumer spending and the appeal of its brand, which attracts new customers to its platform, including much-coveted younger millennials and Gen Z consumers.

Despite recent challenges in the economy, such as inflation and fluctuating interest rates, American Express's customers continue to spend, driving steady growth in volume and interest income.

4. Aon

Aon (NYSE: AON) operates as an insurance broker, connecting clients with insurers to help them find the appropriate types of insurance for managing their risks. The insurance broker model gives Aon a capital-light business, and it enjoys recurring commissions from insurance sales, in addition to advisory fees.

As an insurance broker, Aon benefits from long-term trends driving increased demand for risk protection, including protection against climate change, cybersecurity threats, and geopolitical instability. The company leverages its expertise to help customers manage risk and identify policies that meet their specific needs.

Aon has also invested heavily in analytics and advisory services, aiming for growth in tandem with the economy. This strategy could provide resilience against inflation or rising costs, as such conditions may lead to higher policy prices and, consequently, increased commissions. The company generates solid free cash flow and is another steady Buffett stock to consider adding to your portfolio today.

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American Express is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in American Express and Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, Mastercard, Moody's, S&P Global, and Visa. The Motley Fool has a disclosure policy.