A Top Warren Buffett Stock to Buy Right Now

Why Suncor Energy Inc. (TSX:SU)(NYSE:SU) is Warren Buffett’s top oil sands bet.

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

Image source: The Motley Fool

Warren Buffett is one of the greatest investors of our time, but blindly following him or Berkshire Hathaway in and out of stocks after they’ve been publicly disclosed is usually a losing proposition, especially for near-term thinkers who are looking to make a quick buck.

New holdings of Buffett or Berkshire typically get slapped with a “Buffett premium” after the public learns of his or his firm’s investments, so if you’re a buyer after hearing about his new stock pick, odds are, you’d be paying a much higher price than the Oracle paid. It doesn’t matter if you’ve got the “best” business in the world if you overpay for a stock.

Moreover, without a firm understanding of the business under question, you’ll lack conviction and will probably try to guess what Buffett will do next, or worse, wait until Berkshire’s next 13-F filing before making a move. By the time you’re ready to make a move, tonnes of other copycat investors would have already dumped or added to their stakes in the attempts to copy Buffett’s moves.

If you’re a long-term shareholder who’s willing to do your own homework, and you’re not looking to copy Buffett or Berkshire step for step, then there’s no shame at looking at Berkshire’s 13-F filings, because they’re chock-full of clues as to the industry opportunities to draw your attention to. In addition, a Buffett holding can be a confirmation that your investment thesis is sound if you’ve already owned shares or had a particular name under your radar.

Consider Suncor Energy (TSX:SU)(NYSE:SU), a Buffett stock that Canadians may want to have a second look at should the market-wide pullback continue into the summer.

As Buffett’s horse for betting on the Albertan oil sands, Suncor’s business, as you’d imagine, is in a league of its own. Not only has Suncor been the king of the oil sands, but the firm has kept its investors relatively protected from the magnitude of volatility that’s been plaguing the industry since the 2014 oil implosion.

Suncor has a healthy balance sheet, excellent integrated operations, and a growing dividend that long-term investors can depend on even in times of industry turmoil. Most importantly, Suncor plans to reward its investors, even as WCS prices remain as depressed as they are over a longer period of time. So, in essence, you’re getting huge upside in the scenario where oil prices rebound, and a decent enough risk/reward trade-off should oil prices continue to remain in limbo for longer.

Suncor is one of the best bets in the oil patch. It’s a great way to play the rebounding of oil prices while hedging your bets, as you’ll still be getting a satisfactory return on your investment should that big oil price pop never end up happening.

You’re getting a nice growing dividend, currently yielding 4.03%, that’s yours to keep regardless of the trajectory of oil prices. And if you can get in at a low enough price (preferably below $40), there’s the potential for big capital gains, especially should the WCS-to-WTI gap narrow at some point over the next few years.

Stay hungry. Stay Foolish.

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 Joey Frenette owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of Berkshire Hathaway (B shares).

More on Dividend Stocks

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »

young people stare at smartphones
Dividend Stocks

GST/HST “Vacation”: Everything Canadians Need to Know

The GST/HST "vacation" is a little treat for the holidays, along with a $250 payment. What should you do with…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »