Billionaire Warren Buffett is a master when it comes to investing.
The Berkshire Hathaway CEO is famous for buying and holding stock — and not giving in to the volatility of the market.
His latest play: a $10 billion investment to back Occidental Petroleum's bid for Anadarko Petroleum. Berkshire Hathaway will make the investment by purchasing 100,000 shares of preferred stock, which pays out an 8% annual dividend.
Preferred shares are different from common stock, the one most people are familiar with. Both are equity in a company, but preferred stock typically pays a higher dividend. And that may be attractive in this current low-interest rate environment.
"Think of it as a hybrid security," said certified financial planner Colin Gerrety, client advisor at Glassman Wealth Services.
"It has some aspects similar to ordinary common stock," he added. "It also has some aspects of it that are more similar to a bond."