In this article, we discuss Warren Buffett’s dividend stocks by sectors and industries.
Warren Buffett is a well-known figure in the investment community, and his reputation requires no introduction. He is one of those rare investors whose strategies are closely emulated by countless newcomers to the field. This widespread admiration stems from the fact that Buffett operates in a class of his own. He remains committed to the investment principles he has relied on throughout his career, particularly value investing. The Oracle of Omaha’s lack of enthusiasm for the current AI trend highlights his steadfast dedication to the strategies that have guided his investment approach for decades.
At the Berkshire annual shareholder meeting in May, Buffett was asked about AI’s potential impact on traditional industries. He responded by acknowledging that he was not knowledgeable about the technology but emphasized that this lack of understanding did not imply he dismissed its existence, importance, or significance in any way. That said, Buffett is also enthusiastic about several other strategies beyond value investing.
Also read: Warren Buffett Disciple Guy Spier’s 10 High Conviction Stock Picks
Dividend stocks have been a staple in Berkshire’s portfolio for a long time, with nearly 93% of the holdings focused on them. The media has often highlighted Buffett’s affinity for dividend stocks, particularly because Berkshire Hathaway, his own company, does not pay a dividend. His approach has proven successful, as the investment portfolio managed by Buffett and his team is projected to generate around $6 billion in annual dividend income. Remarkably, $4.36 billion of that income from common and preferred stock dividends comes from just five companies.
Buffett’s approach to dividend investing isn’t driven by chasing the highest yield. Instead, he prioritizes identifying outstanding companies that can maintain and grow their dividends over the long term. He prefers a moderate yield from a stable, successful company over a higher yield from a less reliable and weaker one. If Warren Buffett has a preference for dividends, it’s clear he’s on the right track, given how significantly these stocks have contributed to overall market returns. His love for dividend stocks reflects the significant role these equities have played in contributing to the market’s overall returns over the years. Between 1993 and the end of 2022, the S&P 500 grew by 777%. However, when dividends were factored in, the S&P 500 saw an increase of over 1,400% during the same period. This indicates that dividends accounted for more than 20% of the market’s total return during those years.
Buffett carefully monitors the sectors and industries he invests in, which is a core aspect of his investment strategy. By the end of Q2 2024, the finance sector was the largest portion of his portfolio, followed closely by technology, with substantial investments also in basic materials and consumer goods. This article will explore some of the best Warren Buffett dividend stock selections across these different sectors and industries.
Our Methodology:
For this article, we analyzed Berkshire Hathaway’s 13F portfolio as of the second quarter of 2024 and picked dividend stocks from the portfolio. We mentioned the sectors and industries these stocks belong to and ranked them in ascending order of the hedge fund’s stake in them during Q2 2024.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 2024. 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).
15. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Berkshire Hathaway’s Stake Value: $376,045,343
Sector: Communication Services
Industry: Entertainment
Sirius XM Holdings Inc. (NASDAQ:SIRI) is a New York-based broadcasting company that offers online radio and satellite radio services across the country. The stock is down by over 40% since the start of 2024 because the company is currently facing challenges due to the growing success of its competitors. Spotify, a global leader in digital music, recently announced an 18% increase in monthly active users in North America. In contrast, Sirius XM is struggling with its streaming service, Pandora, which it acquired over five years ago. Pandora has experienced a decline in subscribers, with 41,000 fewer self-pay subscribers for Pandora Plus and Pandora Premium in the second quarter of 2024, bringing the total to six million. In addition, its Q2 revenue decreased by 3% year-over-year to $3.18 billion. Sirius XM Holdings Inc. (NASDAQ:SIRI) has also seen a drop in its own subscriber base, from 35 million in 2020 to 33 million in the most recent quarter.
Though Sirius XM Holdings Inc. (NASDAQ:SIRI) has overall recorded negative returns this year, Berkshire Hathaway’s decision to increase its stake in the company provided it with a bit of relief. The stock surged by nearly 4% between August 14 and August 15, following the news that Buffett had more than tripled its stake in the broadcasting company during the second quarter. The hedge fund began investing in the company in the fourth quarter of 2024, fully exited its position five years later, and then resumed investing in SIRI during the third quarter of 2023. It now holds nearly 133 million SIRI shares, worth over $376 million. The company represented 0.13% of Buffett’s portfolio.
Sirius XM Holdings Inc. (NASDAQ:SIRI), one of the best Warren Buffett dividend stocks, has been growing its payouts for seven consecutive years. The company currently pays a quarterly dividend of $0.0266 per share and has a dividend yield of 3.27%, as of August 21.
Sirius XM Holdings Inc. (NASDAQ:SIRI) has remained popular not just with Berkshire Hathaway but also among elite investment funds overall at the end of Q2 2024. The hedge fund positions in the company grew to 33, from 17 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a total value of roughly $530 million.
14. Ally Financial Inc. (NYSE:ALLY)
Berkshire Hathaway’s Stake Value: $1,150,430,000
Sector: Financials
Industry: Credit Services
Ally Financial Inc. (NYSE:ALLY) is an American bank holding company that provides services related to banking, investing, home loans, and auto finance. The investment appeal of the company lies in its digital-first strategy, which enables lower overhead costs compared to traditional banks. Its strong presence in auto lending and an expanding deposit base create a solid platform for future growth. However, an economic downturn could negatively affect loan performance, especially in the auto sector. Therefore, this financial stock may not be suitable for short-term traders seeking quick gains. Instead, it is more likely to attract value investors who are prepared to hold the stock through multiple business cycles. The stock is up by nearly 19% year-to-date.
Ally Financial Inc.’s (NYSE:ALLY) business model offers a clear indication of the direction in which future banking is heading, particularly with the rise of AI technology. In this era, the absence of a physical presence could prove advantageous, particularly for attracting new deposits. In the second quarter of 2024, the bank reported having 3.2 million deposit customers, up from 1.2 million in 2016, with a customer retention rate of 96%. Additionally, the company reported $13 billion in deposit balances held by investing customers. The company’s unique, all-digital approach has demonstrated value beyond just competitive rates, as evidenced by 61 consecutive quarters of deposit customer growth and over one million actively engaged savings customers.
Berkshire Hathaway did not change its position in Ally Financial Inc. (NYSE:ALLY) during the second quarter of 2024. The hedge fund held 29 million shares in the company at the end of the quarter, valued at over $1.15 billion. The company made up 0.41% of Buffett’s portfolio.
Ally Financial Inc. (NYSE:ALLY) currently pays a quarterly dividend of $0.30 per share and has a dividend yield of 2.85%, as of August 21. It is one of the best Warren Buffett dividend stocks as the company has paid uninterrupted dividends to shareholders since 2016.
At the end of Q2 2024, 45 hedge funds tracked by Insider Monkey held stakes in Ally Financial Inc. (NYSE:ALLY), down from 47 in the previous quarter. These stakes are collectively valued at over $2.36 billion.
13. Mastercard Incorporated (NYSE:MA)
Berkshire Hathaway’s Stake Value: $1,758,749,632
Sector: Financials
Industry: Credit Services
Mastercard Incorporated (NYSE:MA) is a New York-based credit card company that mainly offers payment card services to its consumers. The company stands as a leader in its industry, a fact consistently demonstrated through its earnings reports. In the second quarter of 2024, it had double-digit growth in both net revenue and earnings. This performance was bolstered by sustained healthy consumer spending, a 17% increase in cross-border volume, and strong demand for its value-added services and solutions, where net revenue grew by 18%, or 19% when adjusted for currency fluctuations. These results highlight how the synergy between payments and services creates distinct value for customers, further driving the shift toward digital solutions. The stock has surged by over 11% since the start of 2024 and its 12-month return came in at over 19%.
Mastercard Incorporated (NYSE:MA)’s global card count continues to grow steadily. By the end of Q2 2024, the company’s partners had issued 3.4 billion cards featuring its brands, including Maestro, which is being phased out. This represents an increase of about 200 million new cards compared to the same time in 2023 when the total was 3.2 billion.
Mastercard Incorporated (NYSE:MA) is a strong dividend payer, having raised its payouts for 11 consecutive years. The company has also remained committed to its shareholder obligation as it returned $615 million to investors through dividends, which makes MA one of the best Warren Buffett dividend stocks. The company pays a quarterly dividend of $0.66 per share and has a dividend yield of 0.53%, as of August 21.
As of the close of Q2 2024, 142 hedge funds in Insider Monkey’s database held stakes in Mastercard Incorporated (NYSE:MA), up from 148 in the preceding quarter. The consolidated value of these stakes is over $15.3 billion. Berkshire Hathaway owned the third-largest stake in the company, worth over $1.7 billion.
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