5 Best Dividend Stocks to Buy According to Warren Buffett

In this piece, we will take a look at the 5 best dividend stocks to buy according to Warren Buffett. If you want to read our overview of the dividend stocks and the latest news, then you can take a look at 15 Best Dividend Stocks to Buy According to Warren Buffett.

5. Citigroup Inc. (NYSE:C)

Number of Hedge Fund Holders: 79

Citigroup Inc. (NYSE:C) is the 12th largest holding in Berkshire Hathaway’s portfolio and one of the best dividend stocks to buy, according to Warren Buffett. Citigroup Inc. (NYSE:C) generates a large amount of revenue from providing financial products and services to consumers, corporations, and government institutions.

While Citigroup Inc. (NYSE:C) has been paying dividends since 1990, its quarterly offering stands at $0.53 a share with a yield of 4.25%, one of the highest in Buffett’s portfolios. In the third quarter alone, the company returned 15 billion through dividends and share repurchases to shareholders.

Citigroup Inc. (NYSE:C) had 79 hedge funds in Insider Monkey’s database as shareholders at the end of the third quarter of 2023. This was an increase from the previous quarter when 75 hedge funds held stakes in the company. The value of these stakes was almost $7 billion.

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4. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 88

Bank of America Corporation (NYSE:BAC) is Berkshire Hathaway’s second-largest holding and one of the best dividend stocks to buy, according to Buffett. The legendary investor has held stakes in the financial services company since 2017 and is impressed by its yield, which currently stands at 2.86%.

While Bank of America Corporation (NYSE:BAC) pays a quarterly dividend of $0.24 a share, it has a 24-year run of paying regular dividends to shareholders. The $28 billion worth of shares that Berkshire Hathaway holds generates about $990 million in dividends.

The value of the stakes that 88 hedge funds in Insider Monkey’s database held in Bank of America Corporation (NYSE:BAC) was more than $31.3 billion at the end of the third quarter of 2023. This was a slight decrease from the previous quarter when 90 hedge funds owned shares of the company.

Smead Capital Management, an investment management company, mentioned Bank of America Corporation (NYSE:BAC) in its Q3 2023 investor letter. Here is what the fund said:

“Through the first nine months of the year, we had a gain of 2.10%. The S&P 500 had a gain of 13.07% and the Russell 1000 Value had a gain of 1.79%. The stock market realized markedly higher riskless US Treasury interest rates had their effect on the stock market as it began to reassert what Warren Buffett calls the “gravitational pull” on price-to-earnings ratios (P/E).

On the downside, Target (TGT), Bank of America Corporation (NYSE:BAC) and Pfizer (PFE) detracted the most in the first nine months of the year. Inverted yield curves are historically lousy for the banks, so the weak performance for BAC is no surprise.”

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3. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 134 

Apple Inc. (NASDAQ:AAPL) is a dividend aristocrat stock that has rewarded investors with passive income for about 36 years. The impressive track record stems from the company’s resilient core business that entails manufacturing and selling some of the most sought-after smartphones, MacBooks, tablets, and wearables. Apple Inc. (NASDAQ:AAPL) services unit, which includes the Apple Store, Apple Pay, and cloud services, also generates significant revenue to support dividend and buyback programs.

Apple Inc. (NASDAQ:AAPL) is the largest holding in Berkshire Hathaway’s portfolio, accounting for 50%. Over the past decade, its dividend payout has increased by about 9%. It currently pays a quarterly dividend of $0.24 on a yield of about 0.49%.

The number of hedge funds in Insider Monkey’s database that owned shares of Apple Inc. (NASDAQ:AAPL) dropped slightly from 135 to 134 in the third quarter of 2023. The value of their stakes also decreased from $194 billion to $179 billion.

Here is what Baron Funds said about Apple Inc. (NASDAQ:AAPL) in its Q3 2023 investor letter:

“After a strong start to the year, shares of Apple Inc. partially retraced their gains this quarter. Mixed second calendar quarter financial results, with iPhone, iPad, and Wearables revenue coming in just shy of consensus expectations, coupled with elevated investor concerns about the macro economy and potential weakness in consumer spending later this year, pressured shares. Despite these quarterly fluctuations in product sales, we are encouraged by several long-term trends, including: (1) revenue from higher-margin services like the App Store, iCloud, and Apple Pay, which are growing faster than the overall business, driving better revenue visibility and higher free-cash-flow (FCF) margins; (2) continued gains in global market share in smartphones, wearables, and other hardware categories; and (3) consistent returns of capital to shareholders via share repurchases and dividends. On top of these trends in the core business, Apple is thoughtfully investing in new categories like augmented reality, search, financial services, and streaming media content. We took advantage of weakness in the quarter to add to our position in Apple.”

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2. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders: 140

Mastercard Incorporated (NYSE:MA) is a global financial technology company offering a payment processing network. Mastercard Incorporated (NYSE: MA) oversees payment transaction processing, including authorization, clearing, settlement, and provides additional payment-related products and services. 

While Mastercard Incorporated (NYSE:MA) has paid dividends for about 15 years, its dividend growth streak stands at 11 years. The company is fresh from declaring a 15% increase in quarterly dividend to $0.66 a share at the back of a yield of 0.62%.

Out of the 910 hedge funds that Insider Monkey tracks, 140 of them had stakes in the firm in Q3 2023. The biggest hedge fund stakeholder of Mastercard Incorporated (NYSE:MA) was Akre Capital Management, which Charles Akre owns. They had a stake worth $2.3 billion.

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1. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 167

Visa Inc. (NYSE:V) functions as a payment technology company. Visa Inc. (NYSE:V) also provides credit, debit, and prepaid card products.

Visa Inc. (NYSE:V) stands out as one of the best dividend stocks, having increased its offering by 15% in October to $0.52 a share, marking the 13th consecutive year of dividend growth. Visa Inc. (NYSE:V)’s yield stands at 0.80%.

By the conclusion of the third quarter in 2023, Insider Monkey’s database indicated that 167 hedge funds retained stakes in Visa Inc. (NYSE:V), with a combined value of $24.4 billion. This marked a slight decrease from the 171 hedge funds in the preceding quarter, holding stakes valued at $24.9 billion.

In its Q3 2023 investor letter, Ensemble Capital Management featured Visa Inc. (NYSE:V) among the highlighted stocks. The fund provided the following insights:

“Mastercard is a company that pretty much everyone has heard of. In fact, when we meet with Ensemble’s clients, we occasionally tell them that we’re nearly certain that they are carrying a Mastercard in their wallet or purse as we speak, and if not, they are carrying a Visa Inc. (NYSE:V). Most people carry both.

People carry Mastercard and Visa because they are accepted nearly everywhere in developed markets. And they are accepted in most emerging economies, at least at locations where higher income people spend money. As a shopper you can show up at a bodega in Peru, a high end hotel in Tokyo, a truck stop in Alabama, or an ice cream cart in Milan, show them a piece of plastic and they’ll let you walk away with goods and services without any worry that they aren’t going to get paid…” (Click here to read the full text)

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