1 Warren Buffett-Inspired Stock to Buy for 2020 and Beyond

Warren Buffett has some great pieces of advice that can help you make the best investments possible, and help you find great long-term companies like Suncor Energy Inc (TSX:SU)(NYSE:SU).

| More on:
close-up photo of investor Warren Buffett

Image source: The Motley Fool

Warren Buffett is widely regarded as one of the best investors ever. With a track record like his, it’s almost impossible to dispute.

On top of being so great at his craft, Buffett is also an extremely wise man and a knowledgeable teacher who has given some great pieces of advice over time.

While not all of his advice involves investing, most of it does and can be used to help investors make informed decisions.

Although I have read almost all the books on Buffett, I often review some of his biggest lessons as a little refresher to help ensure that I’m crafting my portfolio to the absolute best of its potential, similar to what Buffett would do in my shoes.

Two of Buffett’s top pieces of advice have inspired the stocks I’m recommending today.

The first piece of advice involves your investment holding periods; Buffett has pointed out that when you are analyzing investments, you should plan to hold the stock you are buying forever.

Focusing on buying stocks that you can own forever will help you eliminate short-term investments you are considering or any companies that don’t have the quality to be held long-term, which will severely improve the make-up of your portfolio.

The second piece of advice Buffett gives is that almost always, the best investments over the long term are boring. By “boring,” he means that you can expect the company to grow over time, albeit it will grow slowly and without much volatility.

While the industry in which it operates may also be a “boring” one, if it’s a lucrative industry and the company is a cash cow, it shouldn’t matter how boring the investment.

One company that fits all of the Buffett rules is Suncor Energy Inc (TSX:SU)(NYSE:SU).

Suncor is the leading energy stock in Canada. It’s such a wonderful company and fits all of Buffett’s rules so well that it’s one of the only Canadian stocks in his portfolio.

The best long-term investments in the energy industry are the integrated companies, as the nature of their integrated operations allow them to better manage their profits even as commodity prices move with volatility.

First and foremost, Suncor is an oil producer. The company has massive capacity with the ability to produce just under one million barrels a day at roughly 960,000 barrels of capacity.

Suncor also has just under 500,000 barrels a day of refining capacity, which is a considerable amount of capacity and key for the company to manage its risk in regard to commodity prices.

Further helping to diversify its revenue, Suncor also owns roughly 1,750 retail sites across the country, helping to integrate the whole business top to bottom.

The composition of the business is what makes Suncor so attractive for investors, and the income the company has been able to generate is nothing short of impressive.

Over the last few years, it’s been growing its margins considerably. From the full year of 2017 up until the trailing 12 months, Suncor increased revenue by roughly 17%; meanwhile, its normalized earnings per share increased by roughly 47%.

In addition to increasing margins giving a boost to its earnings per share, so are its share buybacks. The company has repurchased a number of shares over the last few years and combining its buyback program with its dividend, Suncor shareholders received a 7% yield on the capital returned to them in 2018.

Suncor is clearly the perfect Warren Buffett stock given that you can buy Suncor today and expect to hold it forever.

Suncor’s shares will never move with great volatility, but the slow and steady increases coupled with the major levels of cash returned to shareholders make it the ultimate investment to buy today and hold forever.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa owns shares of SUNCOR ENERGY INC.

More on Dividend Stocks

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Dividend Stocks That Pay Me More Than $54.57 Per Month

These three dividend stocks have done me well over the years, so let's look at how much I've gotten in…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Royalty: 3 Fabulous Stocks to Buy Now for Decades of Passive Income

Rogers Communications stock and Canadian Natural Resources stock could pay you dividends for decades to come.

Read more »