In this article, we will be taking a look at 10 dividend stocks that helped Warren Buffett 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 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 from $406 to $415. The analyst also reiterated an Outperform rating on the stock.
In the second quarter of 2021, Moody’s Corporation 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 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 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, Walmart Inc., The Procter & Gamble Company, and Abbvie, Inc., Moody’s Corporation is a good stock to invest in.
Baron Funds, an investment management firm, mentioned Moody’s Corporation 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 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 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 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 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, Walmart Inc., The Procter & Gamble Company, and Abbvie, Inc., The Bank of New York Mellon Corporation 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 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 shares.
In the second quarter of 2021, Chevron Corporation 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 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 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, Walmart Inc., The Procter & Gamble Company, and Abbvie, Inc., Chevron Corporation 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 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 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 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 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, Walmart Inc., The Procter & Gamble Company, and Abbvie, Inc., U.S. Bancorp 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 from $174 to $185. The analyst also reiterated a Sector Perform rating on American Express Company shares.
In the second quarter of 2021, American Express Company 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 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 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, Walmart Inc., The Procter & Gamble Company, and Abbvie, Inc., American Express Company is a good stock to invest in.
ClearBridge Investments, an investment management firm, mentioned American Express Company 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.”
5. Verizon Communications Inc. (NYSE: VZ)
Number of Hedge Fund Holders: 63
Dividend Yield: 4.52%
Dividend Income Contributed: $399 million
Verizon Communications Inc. (NYSE: VZ), a communication services company, offers a range of communications, technology, and entertainment products and services across the globe. The company ranks 5th on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends.
Cowen, as of this July, holds an Outperform rating on shares of Verizon Communications Inc.. The firm also raised its price target on the stock in the same month, from $66 to $68.
In the second quarter of 2021, Verizon Communications Inc. had an EPS of $1.37, beating estimates by $0.07. The company’s revenue was $33.76 billion, up 10.89% year over year and beating estimates by $1.03 billion.
By the end of the second quarter of 2021, 63 hedge funds out of the 873 tracked by Insider Monkey held stakes in Verizon Communications Inc. worth roughly $11 billion. This is compared to 69 hedge funds in the previous quarter with a total stake value of approximately $11.4 billion.
Miller/Howard Investments, an investment management firm, mentioned Verizon Communications Inc. in its first-quarter 2021 investor letter. Here’s what they said:
“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”
4. The Kraft Heinz Company (NASDAQ: KHC)
Number of Hedge Fund Holders: 33
Dividend Yield: 4.33%
Dividend Income Contributed: $521 million
The Kraft Heinz Company (NASDAQ: KHC) is a food and beverage co company offering its products in the US, Canada, the UK, and across the globe. The company ranks 4th on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends. Its products include condiments and sauces, appetizers, cheese and dairy, meals, meat, seafood, and a range of similar items.
As of this May, DZ Bank has a Hold rating on shares of The Kraft Heinz Company.
In the second quarter of 2021, The Kraft Heinz Company had an EPS of $0.78, beating estimates by $0.06. The company’s revenue was $6.62 billion, beating estimates by $65.74 million. The Kraft Heinz Company has gained 7.95% year to date and 4.29% in the past year.
By the end of the second quarter of 2021, 33 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Kraft Heinz Company worth roughly $14 billion. This is compared to 33 hedge funds in the previous quarter with a total stake value of approximately $13.3 billion.
3. The Coca-Cola Company (NYSE: KO)
Number of Hedge Fund Holders: 62
Dividend Yield: 2.97%
Dividend Income Contributed: $672 million
The Coca-Cola Company (NYSE: KO) is a beverage company operating across the world to provide non-alcoholic drinks to consumers globally. The company ranks 3rd on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends. It offers its products under the Coca-Cola, Diet Coke/Coca-Cola Light, Fanta, and Fresca brands, among others.
Near the end of this July, Bill Chappell, an analyst at Truist, raised his price target on shares of The Coca-Cola Company from $60 to $65. The analyst also reiterated a Buy rating on the stock at the same time.
In the second quarter of 2021, The Coca-Cola Company had an EPS of $0.68, beating estimates by $0.12. The company’s revenue was $10.13 billion, up 41.61% year over year and beating estimates by $823.11 million. The Coca-Cola Company has gained 12.75% in the past 6 months and 7.09% year to date.
By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Coca-Cola Company worth roughly $25 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of approximately $25 billion.
2. Apple Inc. (NASDAQ: AAPL)
Number of Hedge Fund Holders: 138
Dividend Yield: 0.6%
Dividend Income Contributed: $780 million
Apple Inc. (NASDAQ: AAPL) is one of the world’s largest tech giants and is next on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends. The company is known for its highly successful smartphone brand, the iPhone, among a range of other products. It ranks 2nd on our list and is based in Cupertino, California.
Wedbush analyst Daniel Ives reiterated his Outperform rating on shares of Apple Inc. just this August. The analyst also has a $185 price target on the stock.
In the fiscal third quarter of 2021, Apple Inc. had an EPS of $1.30, beating estimates by $0.29. The company’s revenue was $81.43 billion, up 36.44% year over year and beating estimates by $8.09 billion. Apple Inc. has gained 12.7% in the past 6 months and 13,1% year to date.
By the end of the second quarter of 2021, 138 hedge funds out of the 873 tracked by Insider Monkey held stakes in Apple Inc. worth roughly $146 billion. This is compared to 127 hedge funds in the previous quarter with a total stake value of approximately $131 billion.
1. Bank of America Corporation (NYSE: BAC)
Number of Hedge Fund Holders: 87
Dividend Yield: 2.06%
Dividend Income Contributed: $850 million
Bank of America Corporation (NYSE: BAC) is a financial services company offering a range of banking and financial products to consumers including small and middle-market businesses, individuals, institutional investors, large corporations, and governments. The company ranks 1st on our list of dividend stocks that helped Warren Buffett make $4.6 billion in dividends and operates from its headquarters in North Carolina.
At the start of July, David Konrad, an analyst at Keefe Bruyette, assumed coverage of shares of Bank of America Corporation. The analyst holds a Market Perform rating on the stock alongside a $40 price target.
In the second quarter of 2021, Bank of America Corporation had an EPS of $1.03, beating estimates by $0.27. The company’s revenue was $21.47 billion but missed estimates by $330.18 million. Bank of America Corporation has gained 18.09% in the past 6 months and 35.83% year to date.
By the end of the second quarter of 2021, 87 hedge funds out of the 873 tracked by Insider Monkey held stakes in Bank of America Corporation worth roughly $46.5 billion. This is compared to 97 hedge funds in the previous quarter with a total stake value of approximately $45.3 billion.
You can also take a look at 10 Blue Chip Dividend Stocks Hedge Funds Are Buying and How Amazon Makes Money.
Follow Insider Monkey on Twitter
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
This article is originally published at Insider Monkey.
