In this article, we will take a look at some of the best dividend stocks according to Warren Buffett.
Warren Buffett is a widely recognized name in the investment world, known for his influence and expertise. His strategies are closely followed by many aspiring investors, reflecting the high regard in which he is held. What sets Buffett apart is his steadfast commitment to the investment principles that have guided him throughout his career, with a strong focus on value investing. In addition to value strategy, Buffett is also inclined toward dividend stocks.
Dividend stocks have long been a cornerstone of Berkshire Hathaway’s portfolio, accounting for over 90% of its holdings. Buffett’s preference for dividend-paying stocks has frequently been discussed in the media, especially given that Berkshire itself does not distribute dividends. He is recognized for his disciplined approach, focusing on acquiring stocks with the intention of holding them for extended periods—often spanning years or even decades. This long-term outlook enables him to take advantage of compounding returns while staying resilient through market fluctuations. His strategy has delivered strong results, with the portfolio overseen by Buffett and his team expected to generate approximately $6 billion in annual dividend income. Notably, just seven companies are anticipated to generate $4.5 billion in annual dividends for his company.
Read also: 10 Safest Dividend Stocks in the UK
Buffett’s commitment to holding stocks for the long term is often seen as a crucial element of his investment success. Peter Kunhardt, a director of the HBO documentary “Becoming Warren Buffett”, made the following comment in his 2017 interview:
“You don’t have to trade things all the time; you can sit on things, too. You don’t have to make many decisions in life to make a lot of money.”
Buffett’s dividend investing strategy isn’t centered on chasing the highest yields. Instead, he focuses on finding strong, well-managed companies that can sustain and grow their dividends over time. He favors steady, reliable businesses with moderate yields over riskier stocks with higher payouts. Given Buffett’s track record, it’s clear that his approach is well-founded, as dividend stocks have played a crucial role in overall market returns. Between 1993 and the end of 2022, the broader market rose by 777%, but when dividends were included, the total return exceeded 1,400%. This highlights the significant contribution of dividends, accounting for more than 20% of the market’s overall gains during that period.
Examining the performance of dividend stocks over earlier periods reveals that they have played a substantial role in overall market returns. Dividends have historically been a major contributor to the total returns of US stocks, making up nearly one-third of overall equity gains since 1926. From 1980 to 2019, a period characterized by declining interest rates, dividends accounted for 75% of the broader market’s returns. In such environments, dividends become even more valuable, providing consistent income when bond yields are lower. Companies that start paying dividends tend to maintain them and often increase their payouts over time. In addition, issuing dividends can make a stock more attractive to investors, potentially driving up its market value.
By the close of Q3 2024, most companies in Buffett’s portfolio had a strong track record of paying dividends and steadily increasing them over time. Given this, we will take a look at some of the best dividend stocks in Warren Buffett’s portfolio.
Our Methodology:
For this article, we analyzed Berkshire Hathaway’s 13F portfolio as of the third quarter of 2024 and identified dividend stocks. From that group, we picked 13 stocks with the highest number of hedge fund investors, tracked by Insider Money as of Q3 2024. The stocks are ranked in ascending order of hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
13. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 38
The Kraft Heinz Company (NASDAQ:KHC) is an Illinois-based multinational food company that specializes in a wide range of snacks and beverages. The company was formed through the merger of Kraft and Heinz with the goal of improving profitability through cost reductions. However, the integration did not proceed as planned, leading to changes in leadership. In response, the company refocused its efforts on a core portfolio of stronger-performing brands. Despite past challenges, Kraft Heinz has been making steady progress, particularly in strengthening its financial position. Since hitting its peak debt levels in 2020, the company has significantly reduced its leverage, showcasing its ability to navigate current obstacles and reposition itself for long-term growth.
In the past 12 months, The Kraft Heinz Company (NASDAQ:KHC) has fallen by over 20%. Despite facing ongoing challenges, income-focused investors may take comfort in the company’s strong cash position. In the most recent quarter, the company showcased solid cash generation, with annual operating cash flow increasing by 6.7% to $2.8 billion compared to the previous year. Free cash flow also experienced a 9.7% rise, reaching $2 billion. In addition, the company returned $1.5 billion to shareholders through dividends over the first nine months of the year. Its quarterly dividend sits at $0.40 per share for a dividend yield of 5.52%, as of February 10.
At the end of Q3 2024, 38 hedge funds tracked by Insider Monkey held stakes in The Kraft Heinz Company (NASDAQ:KHC), compared with 43 in the previous quarter. The consolidated value of these stakes is more than $12 billion.
12. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 39
The Kroger Co. (NYSE:KR) is an American retail company that operates supermarkets and multi-department stores throughout the US. The company reported strong sales for the third quarter of 2024, driven by solid performance in its pharmacy and digital segments, highlighting the adaptability and strength of its business model. During the quarter, the company grew its customer base by offering great value through competitive pricing, targeted promotions, and high-quality private-label products, all within a seamless shopping experience. The company’s revenue for the quarter reached $33.63 billion, a slight decrease of 0.95% compared to the same period last year.
On October 4, 2024, The Kroger Co. (NYSE:KR) completed the sale of its specialty pharmacy business for $464 million. This transaction resulted in a $340 million decrease in third-quarter sales compared to the same period last year, with annual sales anticipated to drop by around $3 billion moving forward. Since the specialty pharmacy segment had low-profit margins, the sale boosted the company’s gross margin, though it also led to an increase in operating, general, and administrative expenses as a percentage of sales.
The Kroger Co. (NYSE:KR) declared a quarterly dividend of $0.32 per share on January 31, which was in line with its previous dividend. Overall, the company has raised its payouts for 18 consecutive years, which makes KR one of the best dividend stocks on our list. The stock supports a dividend yield of 1.96%, as of February 10.
11. Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 51
Chubb Limited (NYSE:CB) is an insurance company that offers a wide range of insurance products, including property and casualty, life insurance, and reinsurance, with operations across 54 countries. In the fourth quarter of 2024, the company reported net premiums of over $12 billion, which showed a 4% growth from the same period last year. Its primary Property & Casualty (P&C) segment, which represents about 84% of net premiums written in 2024, experienced steady growth with a 7.7% increase compared to the previous year. Net income for the P&C segment reached $5.8 billion, and the combined ratio remained strong at 86.6%, showing a slight improvement from the prior year. The consistent growth of this segment highlights Chubb’s solid foundation in its core business.
Despite its strong performance, Chubb Limited (NYSE:CB) is experiencing a setback due to recent wildfire losses, which are expected to impact free cash flow by $1.5 billion. However, considering the company’s past ability to handle significant losses, such as those from Hurricane Ian and Hurricane Milton, Chubb is well-equipped to manage this challenge.
In Q4 2024, Chubb Limited (NYSE:CB) reported an operating cash flow of $4.57 billion. The company’s cash position remained strong as it paid nearly $1.1 billion to shareholders through dividends and share repurchases. It currently offers a quarterly dividend of $0.91 per share and has a dividend yield of 1.37%, as of February 10. With a 31-year streak of dividend growth under its belt, CB is one of the best dividend stocks to invest in.
10. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 62
An American bank holding company, American Express Company (NYSE:AXP) ranks tenth on our list of the best dividend stocks according to Warren Buffett. Over the long term, the company has proven to be an exceptional investment, providing a 100-fold return since Warren Buffett first bought the stock and a 21% compound annual growth rate (CAGR) in total returns over the past five years. The company has built a nearly permanent inflation-protection model, with its strong competitive advantages becoming even more pronounced as it continues to expand. In the past 12 months, the stock has surged by over 46%.
In the fourth quarter of 2024, American Express Company (NYSE:AXP) reported revenue exceeding $17 billion, marking a 9% increase compared to the same period last year. The company’s net income for the quarter surpassed $2.1 billion, reflecting a 12% year-over-year growth. American Express achieved record highs in annual Card Member spending, net card fee revenues, and new card acquisitions, adding 13 million new cards throughout the year. The company also expanded its global network, adding millions of new merchant locations. By the end of the year, momentum picked up, with billings growth accelerating to 8% in the fourth quarter, driven by stronger consumer and commercial spending during the holiday season.
American Express Company (NYSE:AXP) currently pays a quarterly dividend of $0.82 per share, having raised it by over 17% in January. This was the company’s sixth dividend increase in the past three years. As of February 10, the stock supports a dividend yield of 0.90%.
9. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Chevron Corporation (NYSE:CVX) is an energy company that produces crude oil, natural gas, and many other essential products. The company reported Q4 2024 earnings of $2.06 per share, falling short of analysts’ expectations due to weak margins that caused its refining business to post a loss for the first time since 2020. However, the company achieved revenue of $52.23 billion for the quarter, marking a 10.7% year-over-year increase and exceeding Wall Street’s estimates by more than $3.8 billion. This growth was driven by a 7% increase in global production and a 19% rise in US production, both reaching record levels in 2024. In addition, the company generated nearly $8 billion from asset sales last year and ended the year with a strong balance sheet, maintaining a net debt ratio of 10%.
Chevron Corporation (NYSE:CVX) recently unveiled a partnership aimed at developing scalable power solutions using natural gas-fired turbines, integrating carbon capture and storage to meet the increasing energy demands of US data centers. Moreover, it successfully began gas production from the Sanha Lean Gas Connection project, ensuring a steady natural gas supply for the Angola Liquefied Natural Gas facility.
Chevron Corporation (NYSE:CVX) maintained a solid cash position in FY24, generating $31.5 billion in operating cash flow and $15 billion in free cash flow. The company returned nearly $12 billion to shareholders through dividends. Additionally, it repurchased more than $15 billion of its own shares in 2024, continuing its long-standing practice of share buybacks, which it has carried out in 17 of the past 21 years. The company currently pays a quarterly dividend of $1.71 per share, reflecting a 4.9% increase in January. This marked the 38th consecutive year of dividend growth, which makes CVX one of the best dividend stocks on our list. The stock has a dividend yield of 4.39%, as of February 10.
8. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 67
Moody’s Corporation (NYSE:MCO) is an American multinational financial services company. The company operates through two primary segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA). MIS provides credit ratings for debt instruments and issuers, while MA delivers data, software, and advisory services centered on financial risk management. This dual approach enables Moody’s to generate revenue from both subscription-based services and fees for its ratings and analytics. The diversity of these segments helps protect the company from cyclical market fluctuations, ensuring a consistent revenue stream even during downturns in the credit ratings industry.
In the third quarter of 2024, Moody’s Corporation (NYSE:MCO) reported strong earnings, driven by the success of its highly-rated ratings franchise. The company generated $1.8 billion in revenue, marking a 23% increase compared to the same period last year. This robust revenue growth supported product development and innovation. In addition, Moody’s formed several strategic partnerships with leading industry firms to expand the reach and impact of its data and insights.
Moody’s Corporation (NYSE:MCO) is a solid company in terms of dividends, with its robust cash reserves ensuring it can maintain dividend payments for years to come. In the first nine months of the year, the company reported an operating cash flow of over $2.1 billion, and its free cash flow came in at $1.9 billion. Due to this cash position, the company was able to raise its payouts for 14 consecutive years. It currently pays a quarterly dividend of $0.85 and offers a dividend yield of 0.67%, as of February 10.
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
The Coca-Cola Company (NYSE:KO) is an American multinational beverage company. As a leading player in the industry, the company maintains strong profitability, with operating margins consistently exceeding 20%, reflecting its operational efficiency and financial strength. Investors face minimal financial risk, as the company continues to generate solid earnings even in tough economic conditions. In the latest quarter, it reported nearly $12 billion in revenue, beating analysts’ expectations by $290 million. The company also demonstrated strong cash flow, with $2.9 billion in operating cash flow and $1.6 billion in free cash flow. In addition, it achieved an impressive adjusted operating margin of 30.7%, underscoring its strong profitability.
The Coca-Cola Company (NYSE:KO)’s strongest competitive advantage is its globally recognized brand, which reinforces its market leadership. By consistently offering a trusted and familiar product, the company has cultivated strong brand loyalty, something many competitors strive for. This loyalty enables the company to make strategic pricing adjustments without significantly affecting demand. While unit sales fell by 1% in the most recent quarter, the company successfully offset this decline through effective pricing strategies, showcasing the strength of its customer base. This flexibility ensures Coca-Cola’s long-term stability and ongoing success. The stock has surged by over 8% in the past 12 months.
The Coca-Cola Company (NYSE:KO) is popular among income investors because of its dividend growth streak which spans over 62 years. The company’s quarterly dividend comes in at $0.485 per share for a dividend yield of 3.01%, as of February 10.
6. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 71
Occidental Petroleum Corporation (NYSE:OXY) is an energy company that is engaged in the exploration of hydrocarbons and chemical manufacturing. The company has positioned itself as a forward-looking leader in the energy sector by making significant investments in carbon capture technology, aligning with global energy transition objectives. Although a short-term spike in oil prices may not be anticipated, the company’s strong cash flow, effective management, and strategic approach provide a solid foundation for future growth. For long-term investors, OXY presents an appealing balance of risk and reward at its current valuation, making it a promising opportunity despite market fluctuations.
Occidental Petroleum Corporation (NYSE:OXY) has faced some challenges in the past year, falling by nearly 17% during this period. The stock experienced its sharpest decline in the second half of 2024, following the company’s $12 billion acquisition of CrownRock in August. The deal included $1.2 billion of CrownRock’s existing debt, with Occidental raising nearly $9 billion in new debt to finance the purchase. This acquisition significantly increased Occidental’s debt burden, and the drop in crude oil prices toward the end of the year raised concerns among investors. Many feared that lower oil prices would negatively impact the company’s earnings and cash flow, while the added interest expenses from the new debt further heightened their worries.
However, Occidental Petroleum Corporation (NYSE:OXY)’s dividend policy makes it a lucrative investment for income investors. The company has paid uninterrupted dividends to shareholders for 45 consecutive years. It currently pays a quarterly dividend of $0.22 per share and has a dividend yield of 1.82%, as of February 10.
5. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) is an American multinational investment bank and financial services company with operations in nearly 180 countries and jurisdictions. In the past 12 months, the stock has surged by nearly 50%, outperforming the broader market by a wider margin. The company is in the midst of a multi-year restructuring process, divesting from complex business units and concentrating on areas where it can at least meet its cost of capital. In the past three years, the company has made significant strides in enhancing its risk management, compliance, and accountability.
In FY24, Citigroup Inc. (NYSE:C) saw a nearly 40% rise in net income, reaching $12.7 billion, exceeding its full-year revenue target. This was driven by record performances in Services, Wealth, and US Personal Banking. Expenses were kept within the company’s forecast, and it managed to improve its efficiency ratio while completing a major reorganization. The company’s revenue for the year totaled $81.1 billion, reflecting a 3% increase from the previous year.
On January 14, Citigroup Inc. (NYSE:C) declared a quarterly dividend of $0.56 per share, which was in line with its previous dividend. The stock has a dividend yield of 2.77%, as of February 10. The company is a reliable dividend payer, consistently returning value to shareholders. In 2024, the company distributed $6.7 billion to investors through dividends and share buybacks. The sustainability of its dividends is supported by a payout ratio of 58%. Furthermore, Citigroup has been paying regular dividends to shareholders for the past 34 years, which makes it one of the best dividend stocks on our list.
4. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 98
Bank of America Corporation (NYSE:BAC) is a North Carolina-based multinational investment bank and financial services company. In the past year, the stock has surged by nearly 39%. The company enjoys multiple competitive advantages that solidify its position in the industry and shield it from competition, both from traditional banks and fintech companies. Its extensive distribution network, which combines a robust digital platform with a wide branch presence, allows the bank to grow its low-cost deposit base and attract new customers, boosting revenue. In addition, its large scale supports efficient cost management, ensuring consistent profitability. The bank’s well-established brand also increases its appeal to both existing and potential clients.
In the fourth quarter of 2024, Bank of America Corporation (NYSE:BAC) reported revenue of $25.3 billion, an increase from $22 billion in the same quarter the previous year. Net income rose to $6.7 billion, more than doubling the $3.1 billion reported in the prior year. The bank also expanded its customer base, adding 213,000 new consumer checking accounts, marking the sixth consecutive year of quarterly growth. Additionally, it returned value to shareholders by paying out $2 billion in dividends.
Bank of America Corporation (NYSE:BAC), one of the best dividend stocks, currently offers a quarterly dividend of $0.26 per share and has a dividend yield of 2.23%, as of February 10. The company has been rewarding shareholders with regular dividends for the past 27 years.
3. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 131
Mastercard Incorporated (NYSE:MA) is a New York-based credit card company that offers a wide range of payment processing and related services to its consumers. In the fourth quarter of 2024, the company reported revenue of $7.5 billion, reflecting a 14% increase compared to the same period the previous year. The company’s net income for the quarter reached $3.5 billion, rising from $3 billion in the prior-year period. As of December 31, 2024, a total of 3.5 billion Mastercard and Maestro-branded cards had been issued to customers.
Mastercard Incorporated (NYSE:MA) has delivered an over 23% return to shareholders in the past 12 months. The company has gained investor confidence due to its robust growth, substantial competitive edge, and ability to withstand challenging economic conditions. Its primary source of revenue comes from swipe fees, earning slightly over 2% per transaction on co-branded cards. This simple yet dependable business model enables strong performance during favorable market conditions while shielding the company from credit risks during economic downturns.
Mastercard Incorporated (NYSE:MA) maintained a strong cash position, closing the quarter with more than $8.4 billion in cash and cash equivalents, while total assets exceeded $19.7 billion. In fiscal year 2024, the company generated $14.7 billion in operating cash flow, an increase from $12 billion in 2023. This financial strength enabled it to return $2.4 billion to shareholders through dividends over the year. With 13 consecutive years of dividend growth under its belt, MA is one of the best dividend stocks according to Warren Buffett. It currently pays a quarterly dividend of $0.76 per share and has a dividend yield of 0.54%, as of February 10.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
An American multinational tech giant, Apple Inc. (NASDAQ:AAPL) offers a wide range of related products and services to its consumers. In fiscal Q1 2025, the company reported revenue of $124.3 billion, which showed a 4% growth from the same period last year. The company’s record revenue and robust operating margins contributed to a new all-time high in earnings per share, achieving double-digit growth. This performance enabled the return of over $30 billion to shareholders. Leveraging the capabilities of Apple silicon, the company continues to enhance user experiences through Apple Intelligence, which introduces more personalized and improved app functionalities.
On February 4th, Apple Inc. (NASDAQ:AAPL) introduced Apple Invites, a new iPhone application designed to help users create personalized invitations for various occasions. The app allows users to design and share invitations, manage RSVPs, contribute to Shared Albums, and engage with Apple Music playlists. Additionally, Apple Invites incorporates Apple Intelligence, enabling users to generate images for invitations and craft invitation text using the company’s Writing Tools.
Apple Inc. (NASDAQ:AAPL) reported a strong cash position in Q1. The company had over $30.2 billion available in cash and cash equivalents at the end of the quarter, up from $29.9 billion three months ago. In addition, it generated nearly $30 billion in operating cash flow. It currently offers a quarterly dividend of $0.25 per share and has a dividend yield of 0.44%, as recorded on February 10. AAPL is one of the best dividend stocks on our list with 13 consecutive years of dividend growth under its belt.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is an American multinational payment card service company that offers a wide range of related services and products to its consumers. While discussions continue about the possible challenges posed by fintech and alternative payment methods, Visa’s competitive advantage has only grown stronger over time. The company benefits from its extensive scale and an inflation-resistant business model. Its track record highlights its strong business fundamentals, having achieved a total return CAGR of 21.6% since going public in 2008. In the past 12 months, the stock has surged by nearly 28%.
Visa Inc. (NYSE:V) showed strong earnings in fiscal Q1 2025. The company posted revenue of $9.5 billion, representing a 10% increase from the prior year. During the quarter ending December 31, 2024, the company handled 63.8 billion transactions, up 11% year-over-year. In addition, payment volume grew by 9% on a constant-dollar basis compared to the same period last year.
Visa Inc. (NYSE:V) maintained a solid cash position, closing the quarter with more than $16 billion in cash and cash equivalents. Operating cash flow rose to $5.4 billion, an increase from $3.6 billion in the same period last year. The company also distributed $5.1 billion to shareholders through dividends and share repurchases. It is one of the best dividend stocks on our list as the company has been raising its payouts for 16 years straight. The company offers a quarterly dividend of $0.59 per share and has a dividend yield of 0.67%, as of February 10.
Overall Visa Inc. (NYSE:V) ranks first on our list of the best dividend stocks according to Warren Buffett. While we acknowledge the potential for V as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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