Lots of Berkshire’s high holdings are industry-leading corporations that ship constant outcomes.
Visa has a predictable runway for future development.
The fee processor simply rewarded shareholders with over $22 billion in inventory buybacks and dividends.
10 shares we like higher than Visa ›
Warren Buffett-led Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) holds positions in over 40 publicly traded corporations, six of that are parts of the Dow Jones Industrial Common(DJINDICES: ^DJI).
The Dow has 30 parts in whole, and 4 out of 5 of Berkshire’s largest holdings are Dow shares: Apple, American Specific, Coca-Cola, and Chevron.
Moreover, Berkshire owns Amazon, which was added to the Dow final yr, and Visa(NYSE: V).
This is why Visa is my high purchase of those six names for 2026.
Picture supply: Getty Photographs.
Berkshire’s public fairness portfolio is price roughly $302 billion. However its managed companies are arguably much more invaluable. The crown jewel is its property and casualty insurance coverage companies. Given Berkshire’s experience find worth within the monetary sector, it is no shock that it owns all three of the main bank card corporations — American Specific, Visa, and Mastercard.
Visa is the biggest of the three, each by way of market capitalization and transaction quantity. The extra playing cards that enter the Visa community, the higher the motivation for retailers worldwide to just accept Visa, which boosts income that can be utilized to companion with much more monetary establishments, in flip resulting in extra card issuances. Rinse and repeat.
As you’ll be able to see within the chart, Visa is changing practically half of its income into free money circulation (FCF) — which showcases simply how effectively its enterprise operates.
V Income (TTM) information by YCharts
Visa’s important bills are associated to sustaining and increasing its community, labor, and advertising. It is a very capital-light enterprise mannequin, particularly contemplating that Visa companions with monetary establishments to challenge playing cards. By not issuing its personal playing cards, Visa does not have to fret about bearing the credit score danger. So it isn’t liable for a way responsibly or irresponsibly its card customers handle their spending.
One other profit is that it does not should pay its customers rewards. That is additionally achieved by monetary establishments, resembling JPMorgan Chase‘s Chase Sapphire and Chase Freedom Limitless, the Financial institution of America Buyer Money Rewards card, or the Wells Fargo Lively Money card, that are all Visa playing cards. By comparability, American Specific spends greater than double on cardmember perks than it collects in annual charges (however it makes up for that shortfall in different methods).
Visa’s high-margin enterprise makes it arguably the best money cow within the monetary companies {industry}.
As a result of Visa has low capital expenditures, it is ready to convert practically all of its working money circulation into FCF. Visa returns that FCF to shareholders by means of dividends and extra, importantly, inventory buybacks.
Metric
Full Yr Fiscal 2025
Web money supplied by working actions
$23.06 billion
Capital expenditures
$1.48 billion
Free money circulation
$21.58 billion
Share repurchases
$18.19 billion
Dividends
$4.63 billion
Information supply: Visa. Fiscal yr 2025 ended Sept. 30.
In Visa’s 2025 fiscal yr, which ended Sept. 30, 2025, the corporate returned roughly 4 occasions additional cash by means of inventory buybacks than dividends. Right here lies Visa’s ace within the gap. By utilizing its FCF on buybacks over dividends, Visa constantly reduces its share rely. With fewer shares to go round, Visa’s earnings per share enhance from the core enterprise rising earnings in addition to by means of a decrease excellent share rely.
Buybacks are a big motive why Visa continues to be an excellent worth. Regardless of Visa’s inventory value growing over fourfold within the final decade, Visa’s price-to-earnings (P/E) ratio continues to be simply 32.3 occasions trailing-12-month earnings, which is decrease than its 10-year median P/E of 34.3.
If Visa have been to reallocate share repurchases towards dividends, it will yield a whopping 3.6% as a substitute of its precise yield of 0.8%. Nonetheless, long-term buyers would like Visa to proceed shopping for again inventory disproportionately and paying a comparatively small dividend, because it’s a greater use of capital if the inventory continues to carry out nicely.
Visa checks all of the bins of a high-quality inventory to purchase now. Main indexes, such because the S&P 500, sport comparatively costly valuations as a result of lots of the largest corporations by market capitalization have seen their inventory costs rise sooner than earnings, which places strain on these corporations to ship on expectations.
Visa does not have that drawback as a result of its valuation is affordable. And but, it isn’t a stodgy, low-growth inventory like Coca-Cola, the place buyers can solely pencil in mid-single-digit annual earnings development. Visa ought to proceed to develop earnings within the low double digits per yr, even when shopper spending declines.
Add all of it up, and Visa is one among my highest-conviction buys for 2026.
Before you purchase inventory in Visa, think about this:
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*Inventory Advisor returns as of November 17, 2025
Wells Fargo is an promoting companion of Motley Idiot Cash. American Specific is an promoting companion of Motley Idiot Cash. Financial institution of America is an promoting companion of Motley Idiot Cash. JPMorgan Chase is an promoting companion of Motley Idiot Cash. Daniel Foelber, CFP has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Amazon, Apple, Berkshire Hathaway, Chevron, JPMorgan Chase, Mastercard, and Visa. The Motley Idiot has a disclosure coverage.
Billionaire Warren Buffett Owns 6 Dow Jones Shares. This is My Prime Purchase for 2026. was initially printed by The Motley Idiot
