The Coca-Cola Company (KO), The Procter & Gamble Company (PG), General Electric Company (GE): Three Dividend Stocks Favored by Warren Buffett

Buffett’s ownership history in Procter & Gamble

The Procter & Gamble Company (NYSE:PG) is ranked in 50th place in Buffett’s portfolio. At the end of Q1, Buffett held 52 million shares of Procter & Gamble. P&G has been one of Buffett’s favorite stocks over the years. At present, The Procter & Gamble Company (NYSE:PG) makes up 4.8% of this great portfolio.

How dividends are safe

The Procter & Gamble Company (NYSE:PG) is always considered a safe investment for income portfolios. This is because the company has raised its dividends by 164%, over the past 10 years. The company is fully supporting its dividends with a smart investment strategy and a solid financial position. It’s free cash flow gives cover to its dividend payments. At the end of Q3, free cash flow was $8.1 billion while dividends only accounted for about $4.8 billion.

At the moment, The Procter & Gamble Company (NYSE:PG) is seeking to grow its EPS by 10%, over last year. The company has been showing tremendous top-line growth. However, competitive pricing and depressed economy condensed its margins. To enhance margins, it has announced a $10 billion cost-savings plan. P&G has decreased its employee headcount and enlarged its investment in organic growth opportunities.

Final notes

These three dividend stocks in Buffett’s portfolio look safe at the moment. All three companies have an established history of paying dividends. Over the years, The Coca-Cola Company (NYSE:KO) has shown solid financial situation and strong product line. Coca-Cola looks like a safe investment with the projected EPS growth of 9% for the next five years. General Electric Company (NYSE:GE) also looks like a safe bet as its cash flows support its dividend payments. In case of The Procter & Gamble Company (NYSE:PG), it is a buy for the long haul.

The article Three Dividend Stocks Favored by Warren Buffett originally appeared on Fool.com and is written by siraj sarwar.

siraj sarwar has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Procter & Gamble. The Motley Fool owns shares of General Electric Company. siraj is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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