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Globe and Mail
09-06-2025
- Business
- Globe and Mail
BRK.B's Insurance Business Grows Steadily: Can it Accelerate Growth?
Berkshire Hathaway 's ( BRK.B ) insurance operations serve as the cornerstone of its business model and remain a key growth engine. It's a conglomerate with more than 90 subsidiaries engaged in diverse business activities but is one of the largest property and casualty insurers globally. Berkshire operates through a diverse portfolio of insurance businesses, including GEICO (auto insurance), General Re (reinsurance), and Berkshire Hathaway Reinsurance Group (BHRG). These subsidiaries consistently generate meaningful underwriting profits and collectively represent about one-quarter of Berkshire's total revenues. The segment is well-positioned for sustained growth, supported by broad market exposure, pricing discipline and strong underwriting capabilities — even in adverse market conditions. Berkshire's insurance business continues to generate substantial float—the pool of premiums held before claims are paid. This float has grown steadily, rising from roughly $114 billion in 2017 to $173 billion by the end of the first quarter of 2025. The scale and reliability of this capital have enabled Warren Buffett to invest strategically in both equities and wholly owned businesses, amplifying returns and compounding shareholder value over time. The insurance segment, therefore, contributes far beyond earnings, fueling capital deployment flexibility and enhancing return on equity. For nearly six decades, Berkshire has thrived under Buffett's leadership. As the behemoth prepares for a leadership transition, with Greg Abel set to become CEO on Jan. 1, 2026, investors are watching closely. Buffett will remain executive chairman, ensuring continuity as Berkshire's insurance-led model continues to anchor its long-term strategy. What About BRK.B's Competitors? Chubb Limited CB and The Travelers Companies TRV are two other notable companies in the insurance space. Chubb is focused on capturing growth opportunities in the middle-market segment across both domestic and international arenas. To fuel its long-term expansion, it is strengthening core package solutions while expanding its portfolio of specialty products. Chubb is investing strategically in key initiatives that support its overarching growth objectives. Travelers' insurance operations, benefiting from disciplined underwriting, pricing strategies and a diversified portfolio of personal, business, and bond & specialty insurance, are its key growth engine. Its conservative risk management enables strong returns and sustained shareholder value even amid market volatility. BRK.B's Price Performance Shares of BRK.B have gained 8.9% year to date, underperforming the industry. BRK.B's Expensive Valuation BRK.B trades at a price-to-book value ratio of 1.62, above the industry average of 1.58. But it carries a Value Score of D. Image Source: Zacks Investment Research Estimates Movement for BRK.B The Zacks Consensus Estimate for BRK.B's second-quarter and third-quarter 2025 EPS has moved down 3% and 0.3%, respectively, over the past 30 days. The consensus estimate for full-year 2025 has increased 0.2% and the same for 2026 has moved 2.7% higher. While the consensus estimate for BRK.B's 2025 EPS indicates a decline, the same for 2026 suggests an increase. The consensus estimates for BRK.B's 2025 and 2026 revenues indicate year-over-year increases. BRK.B stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. The Travelers Companies, Inc. (TRV): Free Stock Analysis Report Chubb Limited (CB): Free Stock Analysis Report Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
Globe and Mail
13-05-2025
- Business
- Globe and Mail
The Smartest High-Yield Dividend Stocks in Warren Buffett's "Secret Portfolio" to Buy Right Now
Warren Buffett's secret is out of the bag. He's stepping down as CEO of Berkshire Hathaway at the end of the year. However, the legendary investor has another secret that many don't know about: a portfolio of stocks that doesn't appear on Berkshire's regulatory filings. Berkshire Hathaway acquired General Re in 1998, which had bought New England Asset Management (NEAM) three years earlier. This deal gave Buffett a "secret portfolio" often overlooked by investors. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » But if you're seeking great income opportunities, you can find plenty among NEAM's holdings. Some of the stocks offer exceptionally juicy dividends. Here are the smartest high-yield dividend stocks in Buffett's "secret portfolio" to buy right now. 1. Ares Capital NEAM owns 225,900 shares of Ares Capital (NASDAQ: ARCC), giving Buffett an indirect stake in the largest publicly traded business development company (BDC). Savvy income investors know that BDCs often provide attractive dividend yields because the companies must return at least 90% of their earnings to shareholders as dividends to be exempt from federal income taxes. I think Ares Capital has the best dividend program in the BDC industry. Its forward dividend yield is an ultra-high 9.12%. Ares has paid stable or increasing dividends for 63 consecutive quarters. The company has also delivered the highest base dividend growth over the last 10 years of any externally managed BDC with a market cap of over $700 million. Ares Capital could even appeal to investors who aren't primarily focused on income. Since its initial public offering in 2004, the stock has delivered a 70% greater cumulative total return than the S&P 500 and an average annual total return of 13%. With the Federal Reserve concerned about stagflation, could Ares Capital's business suffer over the near term? Maybe. However, CEO Kort Schnabel believes his company could increase its market share in direct lending. BDCs such as Ares Capital could also be more attractive to middle-market businesses as banks reduce their risk exposure. 2. Duke Energy Utility stocks tend to be great safe havens for investors during turbulent periods. Buffett's "secret portfolio" owns several solid utility stocks. I think Duke Energy (NYSE: DUK) is the best of the bunch. The company provides electricity to 8.6 million customers in North Carolina, South Carolina, Florida, Indiana, Kentucky, and Ohio. It also operates natural gas utilities that serve 1.7 million customers in the Carolinas, Kentucky, Ohio, and Tennessee. Most income investors will probably like Duke Energy's forward dividend yield of 3.47%. I suspect they'll also love the company's dividend track record. Duke has paid a dividend for 99 consecutive years. The company has increased its dividend every year since 2007. While the Trump administration's tariffs are a major concern for many U.S. companies, they present only a minor issue for Duke Energy. CFO Brian Savoy said in the company's first-quarter earnings call that tariffs should impact only 1% to 3% of Duke's five-year capital plan. He added, "And we are confident in our ability to further minimize the impact, leveraging our size and scale to work with suppliers across our diverse supply chain." Duke Energy is also poised to deliver solid growth on top of its juicy dividends. The company projects long-term earnings-per-share growth of 5% to 7%. The Carolinas and Florida rank among the top U.S. states in population growth. Duke should benefit from data center and manufacturing facility construction as well. 3. Verizon Communications Berkshire Hathaway has invested in Verizon Communications (NYSE: VZ) in the past, but no longer has a direct stake in the telecommunications giant. However, Buffett still owns shares of Verizon thanks to NEAM's portfolio. The "Oracle of Omaha" might be thankful for that continued position in Verizon. The telecom company's shares have jumped roughly 9% year to date while the major market indexes floundered. This success is a direct result of Verizon's solid quarterly updates in 2025. Verizon remains a favorite for income investors with its forward dividend yield of 6.21%. The company has increased its dividend for 18 consecutive years. Management ranks supporting and growing the dividend as one of its top capital allocation priorities. Even stronger growth could be on the way for Verizon. The company hopes to close its pending acquisition of Frontier Communications in early 2026. This deal will expand Verizon's fiber footprint and help the company in offering new services related to artificial intelligence (AI) and the Internet of Things. Should you invest $1,000 in Ares Capital right now? Before you buy stock in Ares Capital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ares Capital wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor 's total average return is907% — a market-crushing outperformance compared to163%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 12, 2025
Daily Mail
05-05-2025
- Business
- Daily Mail
Warren Buffett and Donald Trump are two extraordinary men. One is modest and wise, the other vulgar and venal. How sad it's the latter who now defines America, writes DOMINIC LAWSON
This was a career like no other; but at the age of 94, and after 60 years at the helm of his company Berkshire Hathaway, on Saturday Warren Buffett told the annual public meeting of his adoring shareholders that he was leaving them. His voice was weaker than in previous years and he now walks with the aid of a cane. But, still, it came as a shock. Not least because in 2025 the shares in his company had been outperforming the market, rising by 20 per cent. This, more or less, is what Buffett had been achieving since 1965, when he acquired a Massachusetts-based textile mill called Berkshire Hathaway, and turned it into a vehicle for investing in, or buying outright, businesses he admired, run by people he trusted. The results are unprecedented in the history of enterprise. Buffett paid $7.50 a share when he took control of the (far from exciting) company: at the close of last week Berkshire Hathaway's 'A' shares – 38 per cent of which Buffett owns – were trading at a record $809,808.50 each. It was put another way by a grateful investor in 2023, after a period in which the shares had under-performed the market: '$1 invested in the Standard and Poor 500 in 1965 would now be worth $279. $1 invested with Buffett would now be worth $35,521. That is a difference of 127-fold.' Perhaps the most extraordinary aspect is that Buffett has always been a cautious investor – and was scorned in the 1990s when he refused to buy shares in the dotcom boom, saying plaintively 'I would never invest in something I don't understand… I've never seen an electron.' Instead, using the 'free cash' to which he had access as the collector of premiums through the ownership of insurance companies such as General Re, Buffett accumulated colossal stakes in mature US businesses he felt were under-valued at the time. So Berkshire owns 21 per cent of American Express, 10 per cent of Coca Cola and 9 per cent of Bank of America. Actually, the man known as the 'Sage of Omaha' had, before anyone else, appreciated the extent to which many of America's banks were headed for disaster via their investments in so-called 'derivatives'. These, linked to overextended home loans, led to the credit crunch of 2008. That was the year Buffett became, on paper, the world's richest man, as his judgment was vindicated. I got first-hand access to this wisdom, when in 2003 he invited me to interview him at his office in Omaha, Nebraska (a very rare privilege). At one point in our conversation he warned me that 'in a few years' there would be 'major bank failures' because of their 'concentration of risk' in mortgage-backed derivatives. He termed these 'financial weapons of mass destruction'. And they were. It was less easy to get to see Buffett than I had imagined, in a purely physical sense. There are no direct flights from the UK to Omaha, and even when I landed, the taxi driver at the airport at first had no idea where Berkshire Hathaway's office was. Once there, I understood why: the headquarters of what had become the world's biggest conglomerate (now valued at over $1trillion) was part of one floor of a small rented building, with nothing on the outside to indicate Berkshire Hathaway's presence, still less Warren Buffett's. But as I emerged on the 14th floor as instructed, I heard a man's voice calling out, 'Dominic! I'm over here!', and, following this, eventually found Buffett standing outside his office, a small room off a narrow corridor. This unpretentiousness, or modesty, is the very core of the man. While he is fabulously wealthy through his stake in Berkshire Hathaway, making him worth $168 billion at the latest count, he has never sold a single share in the business, or taken a single dividend. He is paid a salary of $100,000 a year and lives accordingly. He still has just one home, the same five-bedroom house he bought for $31,500 in 1958 when his wife Susan was expecting their third child. When I remarked on this with incredulity, Buffett laughed and said 'You should have a look at it. It's about a mile and half from here, on the same road.' I did, later, and found it perched about 200 yards from a multi-lane highway – in other words, less desirable than it would have been in 1958 before the motorway intruded on its suburban peacefulness. Buffett was excoriating, at the meeting the next day of his own grateful small shareholders, about the greed and hypocrisy of America's CEOs putting their own wealth accumulation above the interests of the investors who are actually the owners of the businesses: 'Chief executives talk about 'diversity' but they don't care about any of that kinda stuff. They just care about their comp[ensation]. There's never been such a transfer of wealth in our history. And it's obscene.' You have to imagine this being said by Jimmy Stewart, as in 'It's a Wonderful Life': Buffett's voice was to my ears eerily identical to that mid-Western film star of his youth. And – pursuing the Hollywood theme – at that shareholders' meeting in 2003, they were regaled with a filmed spoof of Buffett appearing in drag as Dorothy from the Wizard of Oz. The unstated point was that the Wizard of Oz is Wall Street, all stuff and nonsense, while mid-Westerner Dorothy tells the plain-spoken truth. Back then, when I asked the immensely frugal Buffett what would happen to his vast fortune after his death, he replied: '100 per cent of my stock will go to my wife, if I die first, but on the death of the last two of us – and maybe sooner – it will all go to a foundation. That will be it.' A few months later, to his great grief – even though she had left the marital home in 1977 – Susan died suddenly, from a stroke. In 2006 Buffett announced that he would give 99 per cent of his wealth to charity 'during my lifetime or at death'. He declared that 'this pledge will leave my lifestyle untouched and that of my children as well. They have already received significant sums for their personal use.' It was very much in line with what he told me in that little office (which, I noticed, contained not a single computer screen): 'It's dumb to let possessions own you.' Buffett has never sought any involvement in political life (although his father Howard, whose stern portrait had looked down on us as we spoke, was a Republican congressman for Nebraska). But last week, he declared that the US should not use 'trade as a weapon' and added: 'It's a big mistake in my view when you have 7.5billion people who don't like you very well.' Buffett didn't mention Donald Trump by name. But I couldn't help thinking what an astonishing contrast there is between these two extraordinary Americans. On the one hand, Buffett's modesty, faithfulness, wisdom and integrity. On the other, Trump's vanity, viciousness, venality and vulgarity. How sad for America that it is the latter now in the ascendant, defining to the world the great nation which should inspire respect rather than revulsion.
