Unlock Your Investment Potential with These Market Leaders
Digital Banking Pioneer: Ally Financial
Berkshire Hathaway's acquisition of a 9.4% stake in Ally Financial underscores its confidence in this leading digital bank and car finance company. Since early 2022, this investment has grown to $922 million, reflecting Ally's robust performance and strategic initiatives. Over the past decade, Ally's stock has appreciated by 45%, delivering a total return of 84% when dividends are reinvested. Its generous dividend yield of 3.8%, supported by a manageable payout ratio of 67%, makes it an attractive option for income-focused investors.
Ally's success is driven by its expansion into auto lending and its innovative digital-only banking model, which significantly outperforms traditional brick-and-mortar competitors. Retail deposits have skyrocketed from $48 billion in 2014 to $143.4 billion in 2024, while cash and equivalents increased from $5.6 billion to $9.6 billion over the same period. By divesting its credit card portfolio and ceasing mortgage origination, Ally has streamlined operations and reduced credit risk. Analysts project a remarkable compound annual growth rate (CAGR) of 51% for earnings per share (EPS) from 2024 to 2027, positioning Ally as a compelling long-term play despite potential short-term challenges posed by declining interest rates.
Financial Data Titan: Moody’s Corporation
Moody’s Corporation, a cornerstone of Berkshire Hathaway's portfolio since its spin-off from Dun & Bradstreet in 2000, exemplifies resilience and steady growth. Berkshire's 13.7% stake, valued at $10.6 billion, remains unwavering since 2013. As a premier provider of financial data, credit ratings, and analytics services, Moody’s plays a pivotal role in facilitating corporate debt issuance and guiding institutional investment decisions. This enduring demand ensures consistent revenue streams, regardless of market conditions.
Despite temporary setbacks caused by higher interest rates in 2022 and 2023, Moody’s maintained a commendable EPS growth CAGR of 9% from 2014 to 2024. Analysts anticipate a resurgence with a projected EPS CAGR of 13% from 2024 to 2027 as interest rates stabilize. Over the last ten years, Moody’s has repurchased 10% of its shares, contributing to a staggering 300% increase in its stock price and a total return of 338%. Although its current dividend yield of 0.9% may appear modest, the low payout ratio of 30% bodes well for future increases. Despite trading at 30 times forward earnings, Moody’s stability and immunity to tariff-related disruptions justify its valuation, making it a reliable addition to any portfolio.
Global Payment Innovator: Visa Inc.
Berkshire Hathaway's commitment to Visa, evident since its initial investment in 2011, highlights the company's unmatched dominance in the global payments industry. Holding a 0.4% stake valued at $2.8 billion, Berkshire has steadfastly retained these shares since 2021. Visa's business model, characterized by partnerships with banks rather than direct card issuance, minimizes credit risks while maximizing profitability through merchant "swipe fees." This strategy has fueled a remarkable EPS CAGR of 16% from 2014 to 2024, even amidst macroeconomic headwinds like the pandemic and inflation.
Analysts forecast a continued EPS growth CAGR of 14% from 2024 to 2027, reinforcing Visa's position as a leader in the card payments sector. Over the past decade, Visa has aggressively repurchased over 20% of its shares, driving a stock price surge of nearly 400% and delivering a total return exceeding 430%. While its dividend yield of 0.7% and payout ratio of 22% may seem modest, Visa's scalability and market dominance ensure its ability to navigate regulatory pressures and maintain its competitive edge. At 30 times forward earnings, Visa represents an evergreen opportunity for investors seeking both stability and growth.