In this article, we will be taking a look at 10 dividend stocks that helped Warren Buffett make $4.6 billion in dividends. To skip our detailed analysis of Buffet’s investment strategy and profile, you can go directly to see the 5 Dividend Stocks that Helped Warren Buffet Make $4.6 Billion in Dividends.
Warren Buffett is an American business magnate and investor, who is also the CEO of Berkshire Hathaway, which is a multinational conglomerate founded in 1839. Judging from his investment successes and fame in global investor circles, the man needs little introduction. Yet, it is still important to take note of his personal and professional history. Buffett has been deemed the world’s seventh-wealthiest person as of April 2021, when his net worth was calculated to stand at over $100.6 billion. He is someone who has demonstrated a profound interest in business and investing since his youth, resulting in him gaining admission into the University of Pennsylvania’s Wharton School in 1947, and eventually graduating from the University of Nebraska when he was 19. Buffett later also graduated from the Columbia Business School, where he was given the opportunity to further develop and nurture his investment philosophy.
As far as Buffett’s investment philosophy is concerned, his strategy is one built around the concept of value investing, which was initially pioneered and spearheaded by Benjamin Graham, a British-born American economist, and investor. Buffett is a man who is famous for his adherence to the concept of value investing, alongside the fact that despite his personal wealth and financial standing, he is known for his careful spending. Through the value investing strategy, Buffett looks for undervalued securities that have the potential to grow, while observing and looking at companies as a whole. He is known for taking into account company performance, debt, and profit margins through his steadfast observations. Buffett’s adherence to the value investing school may seem hard to believe, but it has gotten him where he currently is.
Before taking over Berkshire Hathaway, Buffett worked at Buffet-Falk & Co. as an investment salesman from 1951 to 1954, later at Graham-Newman Corp as a securities analyst from 1954 to 1956, and then finally at Buffet Partnership, Ltd. as a general partner from 1956 to 1969. In 1970, he took over as Chairman and CEO of Berkshire Hathaway and has continued in this position ever since. Berkshire has managed to perform well in the past, as we can see through its performance versus the S&P 500 in terms of the annual percentage change in the per-share market value of Berkshire and the same in the S&P 500 with dividends included.
For 2010, for instance, Berkshire saw a 21.4% change compared to the S&P 500’s 15.1% figure. For 2012, the values were 16.8% for Berkshire versus the S&P 500’s 16%, and for 2014, the values were 27% for Berkshire versus 13.7% for the S&P 500. Finally, to make things clearer, we have the compounded annual gain for Berkshire between 1965 and 2020, versus the same for the S&P 500, standing at 20% versus 10.2%. And while Berkshire Hathaway has undoubtedly witnessed times of economic uncertainty as well, particularly during the financial crisis in the early 2000s and during the global coronavirus pandemic, it has managed to retain its reputation as one of the most successful funds in the world, holding stakes in numerous renowned dividend stocks just like Hormel Foods Corporation (NYSE: HRL), Walmart Inc. (NYSE: WMT), The Procter & Gamble Company (NYSE: PG), and Abbvie, Inc. (NYSE: ABBV).
Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Without further ado, let’s take a look at the 10 dividend stocks that helped Warren Buffett make $4.6 billion in dividends.
Our Methodology
The stocks in this article were picked from Warren Buffet’s portfolio, based on their contribution to the portfolio through dividend payments. For each stock we have mentioned its yield, dividend income, and the number of hedge fund holders holding a stake in it, ranking them on the basis of their monetary contribution to Buffett’s portfolio. Finally, we have used data compiled by Dividend Growth Investor.
Buffett has huge stakes in the stocks listed below. Because these stocks also pay dividends, each stock contributes a hefty amount to the total dividend income raked in by Berkshire annually.
For each stock, we have mentioned the total dividend income contributed based on the stock price, dividend yield and total stake of Berkshire.
Dividend Stocks that Helped Warren Buffet Make $4.6 Billion in Dividends
10. Moody’s Corporation (NYSE: MCO)
Number of Hedge Fund Holders: 44
Dividend Yield: 0.66%
Dividend Income Contributed: $61 million
Moody’s Corporation (NYSE: MCO) is an integrated risk assessment firm operating worldwide through its Moody’s Investors Service and Moody’s Analytics segments. The company is based in New York and offers credit ratings, assessment services on debt obligations, subscription-based research, data, analytical products, and a range of other products and services. It ranks 10th on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends.
This July, BMO Capital’s Jefferey Silber raised his price target on shares of Moody’s Corporation (NYSE: MCO) from $406 to $415. The analyst also reiterated an Outperform rating on the stock.
In the second quarter of 2021, Moody’s Corporation (NYSE: MCO) had an EPS of $3,22, beating estimates by $0.45. The company’s revenue was $1.55 billion, up 8.22% year over year and beating estimates by $67.16 million. Moody’s Corporation (NYSE: MCO) has gained 33.34% in the past 6 months and 28.05% year to date.
By the end of the second quarter of 2021, 44 hedge funds out of the 873 tracked by Insider Monkey held stakes in Moody’s Corporation (NYSE: MCO) worth roughly $16 billion. This is compared to 55 hedge funds in the previous quarter with a total stake value of approximately $13.7 billion.
Like Hormel Foods Corporation (NYSE: HRL), Walmart Inc. (NYSE: WMT), The Procter & Gamble Company (NYSE: PG), and Abbvie, Inc. (NYSE: ABBV), Moody’s Corporation (NYSE: MCO) is a good stock to invest in.
Baron Funds, an investment management firm, mentioned Moody’s Corporation (NYSE: MCO) in its fourth-quarter 2020 investor letter. Here’s what they said:
“Moody’s Corporation provides credit ratings, financial intelligence, and analytical tools to assist businesses in making decisions. Moody’s reported excellent financial results due to continued growth in rated debt issuance. However, the stock detracted on investor expectations that issuance trends will moderate into 2021. The announced retirement of long-time CEO Ray McDaniel may have also weighed on sentiment. We continue to own the stock due to our views of the company’s long runway for growth and strong competitive advantages.”
9. The Bank of New York Mellon Corporation (NYSE: BK)
Number of Hedge Fund Holders: 52
Dividend Yield: 2.54%
Dividend Income Contributed: $98 million
The Bank of New York Mellon Corporation (NYSE: BK) offers financial products and services to consumers in the US and internationally. The company operates through its Investment Services, Investment, Wealth Management, and Other segments. The company ranks 9th on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends.
An analyst at Argus, Stephen Biggar, upgraded shares of The Bank of New York Mellon Corporation (NYSE: BK) this July from Hold to Buy. The analyst also placed a $55 price target on the stock in the same month.
In the second quarter of 2021, The Bank of New York Mellon Corporation (NYSE: BK) had an EPS of $1.13, beating estimates by $0.13. The company’s revenue was $3.96 billion, beating estimates by $98.43 million. The Bank of New York Mellon Corporation (NYSE: BK) has gained 26.49% in the past 6 months and 28.40% year to date.
By the end of the second quarter of 2021, 52 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Bank of New York Mellon Corporation (NYSE: BK) worth roughly $4.9 billion. This is compared to 49 hedge funds in the previous quarter with a total stake value of approximately $4.8 billion.
Like Hormel Foods Corporation (NYSE: HRL), Walmart Inc. (NYSE: WMT), The Procter & Gamble Company (NYSE: PG), and Abbvie, Inc. (NYSE: ABBV), The Bank of New York Mellon Corporation (NYSE: BK) is a good stock to invest in.
8. Chevron Corporation (NYSE: CVX)
Number of Hedge Fund Holders: 50
Dividend Yield: 5.54%
Dividend Income Contributed: $124 million
Chevron Corporation (NYSE: CVX), an energy company also placed on the dividend aristocrats list, is next on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends, and ranks 8th. The company has a presence in the integrated energy, chemicals, and petroleum markets across the globe. It also engaged in cash management and debt financing activities.
Ryan Todd, an analyst at Piper Sandler, raised his price target on shares of Chevron Corporation (NYSE: CVX) just this July. The analyst now holds a $137 target on the shares, up from the $126 target he had held before. Todd has also reiterated an Overweight rating on Chevron Corporation (NYSE: CVX) shares.
In the second quarter of 2021, Chevron Corporation (NYSE: CVX) had an EPS of $1.71, beating estimates by $0.11. The company’s revenue was $37.6 billion, up 178.62% year over year and beating estimates by $1.15 billion. Chevron Corporation (NYSE: CVX) has gained 0.94% in the past 6 months and 14.15% year to date.
By the end of the second quarter of 2021, 50 hedge funds out of the 873 tracked by Insider Monkey held stakes in Chevron Corporation (NYSE: CVX) worth roughly $4.3 billion. This is compared to 41 hedge funds in the previous quarter with a total stake value of approximately $4.9 billion.
Like Hormel Foods Corporation (NYSE: HRL), Walmart Inc. (NYSE: WMT), The Procter & Gamble Company (NYSE: PG), and Abbvie, Inc. (NYSE: ABBV), Chevron Corporation (NYSE: CVX) is a good stock to invest in.
7. U.S. Bancorp (NYSE: USB)
Number of Hedge Fund Holders: 41
Dividend Yield: 3%
Dividend Income Contributed: $217 million
U.S. Bancorp (NYSE: USB) is a financial services holding company that offers a range of financial services in the US by operating through its Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support segments. The company ranks 7th on our list of dividend stocks that helped Warren Buffet make $4.6 billion in dividends.
Mid-July 2021, Oppenheimer’s Chris Kotowski raised his target on shares of U.S. Bancorp (NYSE: USB) from $70 to $73. The analyst also holds an Outperform rating on the stock which he reiterated at the same time.
In the second quarter of 2021, U.S. Bancorp (NYSE: USB) had an EPS of $1.28, beating estimates by $0.15. The company’s revenue was $5.76 billion, beating estimates by $136.74 million. U.S. Bancorp (NYSE: USB) has gained 12.06% in the past 6 months and 21.53% year to date.
By the end of the second quarter of 2021, 41 hedge funds out of the 873 tracked by Insider Monkey held stakes in U.S. Bancorp (NYSE: USB) worth roughly $8.3 billion. This is compared to 43 hedge funds in the previous quarter with a total stake value of approximately $8.3 billion.
Like Hormel Foods Corporation (NYSE: HRL), Walmart Inc. (NYSE: WMT), The Procter & Gamble Company (NYSE: PG), and Abbvie, Inc. (NYSE: ABBV), U.S. Bancorp (NYSE: USB) is a good stock to invest in.
6. American Express Company (NYSE: AXP)
Number of Hedge Fund Holders: 52
Dividend Yield: 1.06%
Dividend Income Contributed: $261 million
American Express Company (NYSE: AXP) is a provider of charge and credit payment card products, alongside travel-related services across the globe. The company operates through its Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services segments. It ranks 6th on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends.
Near the end of July, RBC Capital analyst Jon Arfstrom raised his price target on shares of American Express Company (NYSE: AXP) from $174 to $185. The analyst also reiterated a Sector Perform rating on American Express Company (NYSE: AXP) shares.
In the second quarter of 2021, American Express Company (NYSE: AXP) had an EPS of $2.8, beating estimates by $1.18. The company’s revenue was $10.24 billion, up 33.46% year over year and beating estimates by $652.95 million. American Express Company (NYSE: AXP) has gained 23.1% in the past 6 months and 37.35% year to date.
By the end of the second quarter of 2021, 52 hedge funds out of the 873 tracked by Insider Monkey held stakes in American Express Company (NYSE: AXP) worth roughly $28.7 billion. This is compared to 53 hedge funds in the previous quarter with a total stake value of approximately $24.4 billion.
Like Hormel Foods Corporation (NYSE: HRL), Walmart Inc. (NYSE: WMT), The Procter & Gamble Company (NYSE: PG), and Abbvie, Inc. (NYSE: ABBV), American Express Company (NYSE: AXP) is a good stock to invest in.
ClearBridge Investments, an investment management firm, mentioned American Express Company (NYSE: AXP) in its second-quarter 2021 investor letter. Here’s what they said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
Click to continue reading and see the 5 Dividend Stocks that Helped Warren Buffet Make $4.6 Billion in Dividends.
Suggested articles:
- Aquamarine Capital’s Top 10 Stock Picks
- 15 Countries With Highest Standard of Living in 2020
- Billionaire John Paulson’s Top 10 Stock Picks
Disclosure: None. 10 Stocks that Helped Warren Buffett Make $4.6 Billion in Dividends is originally published on Insider Monkey.
