Warren Buffett's investment decisions at Berkshire Hathaway are watched closely on Wall Street.
Buffett owns Chevron and Occidental Petroleum, and he has also made a material investment in electricity companies.
Investors can buy this one energy giant that will give them exposure to both oil and electricity.
Warren Buffett is known as the Oracle of Omaha because of the long-term success of Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B), his investment vehicle. With Wall Street watching his every move, investors often just buy whatever Buffett owns.
But sometimes it is better to use Berkshire Hathaway's portfolio as a guide rather than a buy list. Here's one energy giant that is worth buying instead of the choices Buffett has made.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
What does Berkshire Hathaway own in the energy sector?
There are really two different portfolios within Berkshire Hathaway. The one that usually gets the most attention from investors contains the publicly traded stocks Buffett and his team own. Investors can literally buy the same stocks if they want.
But there's also an even larger portfolio of controlled companies that Berkshire Hathaway owns. Investors can't buy these since Buffett has basically acquired them in their entirety.
Image source: The Motley Fool.
In the energy sector, the publicly traded portfolio includes both Chevron(NYSE: CVX) and Occidental Petroleum(NYSE: OXY). These are two large oil and natural gas companies, with Chevron ranking among the world's largest integrated energy businesses, and Oxy, as the latter is more commonly known, attempting to grow its way into that group. Clearly, Buffett sees some value in oil and gas companies.
But that's not the only energy investment he has made. He also has material exposure to the electricity space via a collection of utilities that Berkshire Hathaway owns in their entirety. Notably, this group of owned companies is working toward producing cleaner energy in a shift away from fuels like coal.
There's a way for investors to invest in both general themes here with one investment. That would be to buy TotalEnergies(NYSE: TTE) and its attractive 6.7% dividend yield.
What does TotalEnergies do?
TotalEnergies is based in France and is one of the world's largest integrated energy companies, competing directly with Chevron. It has a global portfolio of assets but tends to have more positive relations with developing countries that sometimes have more contentious relationships with peers based out of the United States. This is partly a result of TotalEnergies' geographic location and partly a result of the general political environment in which the energy major operates.
Like Chevron and Oxy, TotalEnergies' top and bottom lines tend to ebb and flow along with oil prices. That's just inherent to the business, though TotalEnergies has midstream (pipeline) and downstream (chemicals and refining) businesses that help to soften the deep peaks and valleys it often sees. Basically, it could easily replace Chevron or Oxy in your portfolio.
But the one thing that TotalEnergies has that neither of these two U.S. energy companies offer is a growing business tied to electricity generation. Its electricity business, which it calls integrated power, is focused on increasing the company's position in clean energy.
Simply put, it is attempting to change along with the world around it, which is basically what Berkshire Hathaway is trying to do with its utility operations. This is no throwaway business for TotalEnergies, which has a long-standing commitment to growing this division -- the integrated power operation expanded by 17% in 2024.
So, in one investment, you cover two broad investment themes that Buffett has in Berkshire Hathaway's portfolio of public and owned businesses. In addition, a healthy dividend yield is part of the package (but keep in mind that U.S. investors will also be subject to French withholding taxes on TotalEnergies dividends, a portion of which can be claimed back at tax time).
TotalEnergies is holding firm to its long-term plans
What's most interesting is that its commitment to the integrated power division has held up even as competitors like BP and Shell have walked back their clean energy plans. This highlights that management has the same kind of long-term commitment to its investments that Buffett has long shown within his portfolio at Berkshire Hathaway.
If you think in the long term, too, maybe take a look at TotalEnergies as a way to play two Buffett themes with one single high-yield investment.
Should you invest $1,000 in TotalEnergies right now?
Before you buy stock in TotalEnergies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and TotalEnergies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you’d have $623,685!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you’d have $701,781!*
Now, it’s worth notingStock Advisor’s total average return is906% — a market-crushing outperformance compared to164%for the S&P 500. Don’t miss out on the latest top 10 list, available when you joinStock Advisor.
Reuben Gregg Brewer has positions in TotalEnergies. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool recommends BP and Occidental Petroleum. The Motley Fool has a disclosure policy.
