Better Warren Buffett Stock: Chevron vs. American Express

Core View - Warren Buffett's portfolio includes American Express and Chevron, which present very different investment propositions [1] - American Express is currently expensive based on traditional valuation metrics, while Chevron offers a more attractive dividend yield [4][5][6] American Express Overview - American Express operates in the finance sector as a globally integrated payments company, primarily known for its credit card business [2] - The company focuses on higher-end customers who spend more and are resilient to economic volatility, leading to a strong business foundation [2] - American Express' share price has roughly doubled since late 2023, making it expensive with a price-to-sales ratio of 3 3x versus a five-year average of 2 5x and a price-to-earnings ratio of 22x versus a longer-term average of 18x [4][5] - The company's dividend yield is 0 9%, near its lowest levels of the past decade [5] Chevron Overview - Chevron operates in the energy sector with a globally diversified portfolio of oil and natural gas production, transportation, and processing assets [3] - The company's financial performance is closely tied to energy prices, which are prone to dramatic swings [3] - Chevron offers a dividend yield of 4 4%, which has been in the top half of the range over the past decade [6] - The company has increased its dividend annually for 37 consecutive years, demonstrating management's ability to navigate sector volatility [7] Investment Comparison - Conservative investors may prefer American Express' business model due to its annuity-like revenue stream, but the current entry price is not attractive [4][5] - Chevron is a more attractive choice for dividend-focused investors, given its high yield and long history of dividend increases, despite the inherent volatility of the energy sector [6][7]