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First Brexit… then Trump… Now, it’s time for Pro

Is your portfolio really prepared for what’s coming next?

To help investors like you navigate this historically uncertain — yet high-flying — market and prepare for an inevitable downturn, we’re re-opening our Motley Fool Pro Canada service to a select few new members for a short time.

To discover how Pro Canada could help you to increase your upside potential… reduce your downside risk… and earn paycheque-like income in the process, simply click here — before the small number of spots we have left are all gone!

Which Top Holdings Might Warren Buffett Buy More of Today?

Warren Buffett stated, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Great companies make money in good times and bad, and they become more profitable over time.

Dividends

We all know that Mr. Buffett loves his dividends. In fact, of the top 10 holdings of Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) at the end of 2015, nine pay dividends.

Companies that have paid growing dividends for many years demonstrate their abilities to remain profitable and to generate earnings and cash in all kinds of economic environments.

Great companies at fair prices

Of Berkshire’s top dividend companies, some are fairly priced today. They all have some sort of competitive advantages against their peers, which helps them remain profitable.

Wells Fargo & Co (NYSE:WFC) was Berkshire’s largest holding, making up 19.8% of its portfolio at the end of 2015. At US$50.51 per share, the diversified bank yields 3% and is priced reasonably at 12.2 times its earnings.

It pays out about 36% of its earnings as dividends, so its dividend is sustainable and has the potential to grow. In fact, it should be announcing a dividend hike this week.

International Business Machines Corp. (NYSE:IBM) was Berkshire’s fourth-largest holding, making up 8.5% of its portfolio. At US$148.85 per share, the technology company yields 3.5% and is fairly priced at a depressed multiple of 10.3 due to its multi-year earnings decline trend.

It pays out about 35% of its earnings as dividends, so its dividend is sustainable and has the potential to grow. According to its usual dividend-hike schedule, it should announce a dividend hike this quarter.

American Express Company (NYSE:AXP) was Berkshire’s fifth-largest holding, making up 8% of its portfolio. At US$65.69 per share, the credit cards company yields 1.8% and is priced at a reasonable multiple of 12.1.

It pays out about 22% of its earnings as dividends, so its dividend is sustainable. The company should hike its dividend this quarter.

Conclusion

It doesn’t take a rocket scientist to invest for satisfactory returns, but it does take a patient investor who isn’t swayed by market emotions, can buy wonderful companies when they’re at fair prices, and hold them for a long time to reap the benefits of a growing business.

Currently, Wells Fargo, IBM, and American Express are priced at reasonable valuations. Mr. Buffett might just buy more shares of these great companies today. How about you?

Wells Fargo makes up about 20% of Buffett’s portfolio. Investors should be aware of the weightings of each holding in their portfolios, so they remain comfortable and can sleep well at night.

Urgent update: Motley Fool issues rare "double down" stock alert

Not to alarm you but you recently missed an important and rare event. Stock Advisor Canada issued a "double down"... and history suggests it pays to listen. Because 10 of the most lucrative "double downs" in one of the Motley Fool's premier services skyrocketed an average of 434%! So, simply click here to discover why Motley Fool "double downs" have some investors rocking with excitement. Five years from now, you'll wish you'd grabbed this stock. Click here to learn more.

Fool contributor Kay Ng owns shares of International Business Machines. The Motley Fool owns shares of Berkshire Hathaway and Wells Fargo and has the following options: short May 2016 $52 puts on Wells Fargo.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

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