Why Buffett's Visa Bet Might Be the Safest Play in 2026

Warren Buffett’s Berkshire Hathaway holds stakes in six Dow Jones stocks, but here’s the thing: Visa stands out as the ultimate cash-printing machine.

Buffett’s portfolio is loaded with household names—Apple, American Express, Coca-Cola, Chevron—but Visa’s business model is in a league of its own. Here’s why.

The Network Effect is Unstoppable

Visa doesn’t issue credit cards. That’s the secret sauce.

While American Express wrestles with card rewards costs (spending more than 2x what it collects in annual fees), Visa just sits back and collects network fees. The more merchants accept Visa, the more banks want to issue Visa cards. More cards = more transactions = more revenue. It’s a flywheel that basically runs itself.

And the math is brutal in Visa’s favor: nearly 50% of revenue converts to free cash flow. That’s not growth stock territory—that’s cash cow efficiency.

Follow the Money: $22B in Shareholder Returns

Here’s where it gets interesting. In fiscal 2025, Visa generated $21.58 billion in free cash flow. Instead of hoarding it, the company returned roughly $22.8 billion to shareholders through buybacks ($18.19B) and dividends ($4.63B).

The kicker? Visa prioritizes buybacks over dividends by a 4:1 ratio. This means:

• Fewer shares outstanding
• Higher earnings per share (even if core business grows flat)
• Compounding returns for long-term holders

If Visa flipped this and paid out dividends instead, the yield would jump to 3.6%. But sophisticated investors know buybacks are better capital allocation if the stock keeps performing.

Valuation is the Plot Twist

Here’s what’s wild: Visa’s stock is up 400% in a decade, yet it trades at just 32.3x P/E—below its 10-year median of 34.3x.

Meanwhile, the S&P 500 is packed with mega-cap tech stocks trading at nosebleed valuations. Visa? Still reasonable.

And unlike Coca-Cola’s predictable mid-single-digit growth, Visa should keep delivering low double-digit earnings growth annually—even if consumer spending softens.

The 2026 Thesis

Visa checks every box:

• Predictable, recurring revenue ✓
• Fortress balance sheet ✓
• Disciplined capital allocation ✓
• Growth runway intact ✓
• Reasonable valuation in an expensive market ✓

This is exactly the type of compounding engine Buffett loves. In a year where growth is hard to find at sane prices, Visa remains one of the highest-conviction bets.