2 Warren Buffett Stocks for September 2022 That Will Make for a Strong Portfolio

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Companies that pay dividends are great, but only if they are sustainable. When considering investing in a stock for regular income, you need to look at the company’s payment history and cash balances. If you find stocks in the stock-market that tick both boxes, they are easy securities to pick and could fit the criteria of being labelled as Warren Buffett stocks that fit the mold of the legendary investor at Berkshire Hathaway. The two companies mentioned below are seen as bullish stocks and are both very profitable, and with minimal volatility.- a grocery stock and gold mining stock, are some of Canada’s finest Dividend Aristocrats. They have solid businesses with strong fundamentals and have weathered multiple economic downturns in the past.

Without Further adieu, here are the best stocks to buy in September 2022 that even the legendary value investing wizard Warren Buffett would approve of: 

2 Warren Buffett Stocks for September 2022 That Will Make for a Strong Portfolio

Grocery Stock To Buy

Loblaw (L)

Overview: Loblaw is Canada’s largest grocer conglomerate and often seen as a blue chip stock. It also has an expansive footprint in pharmacies and general merchandise. It is the most significant player in Ontario regarding offline stores. Its grocery brands include Loblaw, No Frills, and Maxi. IN 2014, it acquired the pharmacy chain Shoppers Drug Mart. Loblaw is more than a mere retailer. It also operates a financial-services business that sells credit cards and guaranteed investment certificates and operates its PC Optimum loyalty program. The Weston family controls the firm via its George Weston Limited unit, which owns 52.6% of Loblaw equity.

Financials: Loblaw reported strong numbers in its Q2 2022 earnings report. Revenue grew 2.9% year-on-year to $12.8 billion. Retail segment sales were $1,26 billion, an increase of 2.8% or $341 million. E-commerce sales decreased by 17.5%, proving that shoppers were heading back to physical shops after lockdowns last year. Operating income came in at $742 million, a decrease of $10 million, or 1.3%, due to a tax matter. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased 9.3% or $128 million to $1.5 billion. Adjusted net earnings rose 22% year on year to $566 million. Adjusted diluted earnings per share (EPS) jumped 25% yearly to $1.69.

Future Growth: The company acquired Lifemark Health Group, strengthening Loblaw’s position in the healthcare service provider space. It also launched PC Express Rapid Delivery in collaboration with DoorDash. This is Loblaw’s attempt at delivering groceries and other items in 30 minutes or less.

The ace in Loblaw’s sleeve is its financial service segment. The company issues credit cards, enabling it to track and understand its customers’ spending patterns. The country’s largest grocer knows exactly where its customers are spending money. It can tailor its offers to suit different customer profiles. Its financial services arm reported revenue of $297 million for Q2 2022, an increase of $25 million or 9.2% from Q2 2021. The company said, “The increase was primarily driven by higher interest income and other credit card related fees from normalizing credit card receivable balances and higher interchange income from an increase in consumer spending.”

Loblaw said it expects its retail business to grow earnings faster than sales. It will invest around $1.4 billion in capital expenditures and “expects full-year adjusted net earnings per common share growth in the mid-to-high teens.” Loblaws also has as aspect of protection as a hedge for a potential shareholder during a prolonged recession as food will always be a necessity and will likely be correlated with inflation. 

Dividend Payout and Price Target: Loblaw has increased its dividend payouts at a CAGR (Compounded Annual Growth Rate) of 6.35% since 2016. The grocery stock currently has a forward yield of 1.33%. This is as good as money in the bank. The stock closed on August 26 at $117.31, and the average analyst price for the grocery stock is $130, a potential increase of almost 11%. Loblaw stock will stabilize your portfolio and outperform most other equities. 

Gold Mining Stock To Buy

Barrick Gold (ABX)

Overview: Barrick is one of the world’s largest gold and copper producers, operating mines and projects in 18 countries in North and South America, Africa, Papua New Guinea, and Saudi Arabia. The company has solid fundamentals and a strong balance sheet to be considered as an undervalued stock that makes it a good stock for traders to invest in. It is a crucial component of the TSX Dividend Aristocrat Index.

Financials: Barrick had an impressive Q2 2022. It reported $488 million in income, an increase of 18.73% compared to Q2 2021. EPS (Earnings Per Share) came in at $0.27 a share, up from $0.23 a year ago, and beat estimates as well. These numbers were good because of increased copper production (up 25% at 120 million lbs compared to the same period in 2021) and a higher price realization for gold at $1,861.

The company’s numbers would have been better if not for inflation. Mining costs went up for Barrick. The cost of producing an ounce of gold rose to $1,212 compared to $1,164 per ounce in Q1 2022 and $1,087 per ounce in Q2 2021. Barrick’s project capital expenditure rose 11% compared to Q2 2021 to $226 million in Q2 2022.

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Future Growth: Barrick stated it is set to meet its copper production targets of 420 million lbs to 470 million lbs for 2022.

Barrick will grapple with high energy prices and inflation for the rest of 2022. It expects to be “either at the top end or slightly above” its all-in-sustaining cost guidance for gold in 2022. The range is between $1,040 to $1,120 per ounce of gold. For the first half of 2022, Barrick’s all-in cost of gold production is $1,188, which means it will have to find ways to cut costs. The company said it is confident in doing that.

Dividend Payout and Price Target: Barrick announced a dividend payout of $0.2 per share for Q2 2022. It had a net cash worth of $636 million as of June 30, 2022, making it easy to sustain dividend payouts. The company has been a regular dividend payer and entered the Dividend Aristocrat index on the back of consistently increasing its payouts.

Barrick has a forward yield of 4.91% and the gold mining stock has lost almost 30% in the last six months. Its solid numbers for 2022 could guide Barrick to continue to deliver good earnings for the remaining two quarters of 2022. The possibility of the US Federal Reserve continuing to raise rates might be high, and this could cause people to turn to gold as an alternative investment.

Barrick stock closed at $20.17 on August 26, and the average analyst target price for the gold mining stock is $31.04, a potential upside of almost 54%. Considering the forward dividend yield of nearly 5%, Barrick could be one of the smartest buys of 2022.

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