So Warren Buffett is up Verizon Communications (WKN: 868402) largely separate. As the Q1 update showed, Oracle of Omaha sold shares for approximately $ 8.3 billion. Thus, the bulk of the sales proceeds should have hit the American telecommunications group. I have not rained exactly now.
But why does Warren Buffett sell Verizon Communications. And more importantly: Is the stock no longer a buy? Exciting questions. Let’s try to find an answer or two.
Still in Warren Buffett’s portfolio: Verizon Communications
While the $ 8.3 billion Warren Buffett took out of the Verizon Communications stock could be a big cut. Nevertheless, there are still shares in the US telecommunications group in the custody of Berkshire Hathaway (WKN: A0YJQ2). But to be honest: your weight is light. The trend also shows that further sales could well follow.
But why is Warren Buffett no longer investing in Verizon Communications now? Does he no longer believe in the stock, is it possibly even wrong? In any case, the risk-reward ratio has not changed much. It remains the case that the telecommunications group can create solid returns. With a price / earnings of less than 10 and a dividend of more than 5%, the valuation is cheap. But perhaps the timeless classic is simply no longer as attractive to the star investor in times of rising interest rates.
Despite this, this stock can now continue to generate solid returns. Especially after investing in 5G technology, the phase of a moderately growing, increasing cash flow should actually take place. Management is also talking about dividend increases and possible share buybacks. In itself an interesting, but admittedly quite conservative mix.
Nothing for a concentrated portfolio!
Verizon Communications is apparently no longer for Warren Buffett. For me, however, this is primarily due to the fact that the star investor no longer sees room for this share in its concentrated portfolio. Especially in times of rising interest rates and with a less attractive return potential as a result. Elsewhere, he simply senses higher returns.
Despite this, Verizon Communications can still promise stability, moderate growth and solid earnings returns. Investors in this more defensive dividend stock should therefore feel as comfortable with it as they did before.
By the way: Warren Buffett first bought the stock in 2020. In fact, it is not its preferred buy-and-hold approach that is another notable takeaway at this point.
Articles Warren Buffett: Get out of Verizon Communications! first appeared on The Motley Fool Germany.
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Vincent owns shares in Berkshire Hathaway and Verizon Communications. The Motley Fool owns shares in and recommends Berkshire Hathaway (B shares) and recommends Verizon Communications and the following options: short January 2023 $ 200 put on Berkshire Hathaway (B shares), short January 2023 $ 265 call on Berkshire Hathaway (B shares) and Long January 2023 $ 200 Call on Berkshire Hathaway (B shares).
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