Drugmakers

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Just last week, the FDA approved Merck's antiviral COVID-19 pill for at-home use. But Berkshire wasn't around to benefit from the good news.

In Q3, Buffett sold 9.16 million shares of the multinational pharmaceutical company, exiting his position entirely.

But the sale shouldn’t come as a complete surprise. Berkshire already unloaded millions of Merck shares in Q1 and Q2.

Buffett’s company also sold 6.13 million shares of drug giant AbbVie and 4.25 million shares of Bristol-Myers Squibb in Q3.

The COVID-19 pandemic gave investors a new reason to check out big pharmaceutical companies, but that doesn’t mean every stock in the segment has outperformed.

Over 2021, AbbVie rose about 30%, Merck was flat, and Bristol-Myers was up slightly. Meanwhile, the S&P 500 rose nearly 30% in 2021.

But what really makes these drugmakers stand out? Dividends.

Each of the companies mentioned above currently provides an annual dividend yield of above 3.4%, much higher than the S&P 500’s 1.2%.

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Financials

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Financial stocks have had a solid bull run over the past year. And Buffett is cashing some chips in.

In Q3, Berkshire sold 276,108 shares of Mastercard, lowering its stake in the credit card giant by roughly 6%. It also cut its position in Visa by 4%.

Buffett also sold 2.47 million shares of U.S. Bancorp, the fifth-largest bank in the country. But it was just a 2% reduction in Berkshire’s stake.

Buffett isn’t exactly turning bearish on financials.

After all, Berkshire continues to hold more than one billion shares of Bank of America, a position with a current market value of roughly US$45 billion. Berkshire also still owns approximately 151.6 million shares of American Express.

At the end of Q3, Bank of America and American Express were Berkshire’s second- and third-largest holdings, respectively.

These established financial firms pay regular quarterly dividends, which can be great for retail investors looking for passive income. And financials tend to do well in rising interest rate environments, making them a particularly timely opportunity.

These days, you can build your own blue-chip stock portfolio just by using some of your spare change.

Steady income beyond stocks

Aerial View Of Industrial Commerce Office Buildings.
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Even if you’re not bullish on these dividend-paying stocks, generating regular income should be a top priority for risk-averse investors.

And you don’t have to limit yourself to the stock market to do that.

If you want to invest in something insulated from stock market swings, take a look at a market that has moved very differently form stocks: fine art.

Traditionally, investing in sectors like art or or multifamily apartment buildings have only been options for the ultrarich. But with the help of a new app, you can buy fractions of multi-family residential or commercial properties.

You can even use a fractional investing platform to buy fractions of pricey shares like Apple, meaning that even if you only have a little cash to spare, you can still share in the profits to be made in pricey assets.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, Jing was a research analyst and editor at one of the leading financial publishing companies in North America. Jing has covered numerous aspects of the financial markets, from blue chip dividend stocks to small cap tech stocks to precious metals and currency. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. In his spare time, Jing plays basketball, the violin and the ukulele.

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