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.
12. Visa Inc. (NYSE:V)
Berkshire Hathaway’s Stake Value: $2,177,834,326
Sector: Financials
Industry: Credit Services
An American credit card service corporation, Visa Inc. (NYSE:V) ranks twelfth on our list of the best Warren Buffett dividend stocks. The company manages a credit card network that facilitates the transfer of funds from customers to merchants. It collaborates with financial institutions that handle the credit aspect of transactions conducted through its channels. Despite the challenges posed by rising inflation in recent years, Visa Inc. (NYSE:V) has shown resilience. The company has also developed new segments that are growing more rapidly than its traditional business, and although these segments are still smaller, they are helping to offset some of the pressures on the overall business. The stock has surged by over 396% over the past 10 years, outperforming the broader market, which returned 183% during this period.
In fiscal Q3 2024, Visa Inc. (NYSE:V) reported revenue of $8.9 billion, which showed a 10% growth from the same period last year. The company’s key business metrics remained stable, with a 7% increase in payments volume, a 14% rise in cross-border volume, and a 10% growth in processed transactions. During the quarter, the company also strengthened its partnerships with clients globally and introduced several new innovations aimed at shaping the future of commerce.
Aoris Investment Management also highlighted strengths in Visa Inc. (NYSE:V)’s operations in its Q2 2024 investor letter. Here is what the firm has to say:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, which facilitates the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text)
On July 23, Visa Inc. (NYSE:V) declared a quarterly dividend of $0.52 per share, which was in line with its previous dividend. Overall, the company has been raising its payouts for 15 consecutive years, which makes V one of the best Warren Buffett dividend stocks. In fiscal Q3 2024, the company returned $5.8 billion to shareholders through dividends and share repurchases.
As of the close of Q2 2024, 163 hedge funds held stakes in Visa Inc. (NYSE:V), compared with 166 in the previous quarter, as per Insider Monkey’s database. These stakes are worth nearly $25 billion in total. With over 16.7 million shares, TCI Fund Management was the company’s leading stakeholder in Q2.
11. The Kroger Co. (NYSE:KR)
Berkshire Hathaway’s Stake Value: $2,496,500,001
Sector: Consumer Staples
Industry: Grocery Stores
The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates supermarkets and multi-department stores throughout the US. The company reported a strong start to 2024, as seen by its fiscal Q1 2024 earnings. This growth was driven by the better-than-expected performance of its grocery business. It provides exceptional value during a time when customers need it most, offering affordable prices along with personalized promotions. The company acknowledges the efforts of its associates in enhancing the customer experience and improving store operations, which in turn is driving household growth and increasing customer visits.
The long-term investments The Kroger Co. (NYSE:KR) has made to strengthen and diversify its business model have enabled the company to navigate economic cycles effectively, giving it confidence in meeting its full-year outlook. The company reported revenue of $45.3 billion in Q1 2024, up from $45.2 billion in the same period last year. By continuing to deliver value to customers and investing in its associates, Kroger is well-positioned to generate attractive and sustainable returns for its shareholders. The stock is up by over 13% since the start of 2024.
On June 27, The Kroger Co. (NYSE:KR) declared a 10% hike in its quarterly dividend to $0.32 per share. Through this increase, the company stretched its dividend growth streak to 18 years, which makes KR one of the best Warren Buffett dividend stocks. The stock supports a dividend yield of 2.44%, as of August 21.
The Kroger Co. (NYSE:KR) was included in 46 hedge fund portfolios in the second quarter of 2024, the same as in the previous quarter, according to Insider Monkey’s database. The stakes held by these hedge funds have a total value of more than $4 billion. Berkshire Hathaway owned 50 million KR shares, worth $2.5 billion, becoming the company’s largest stakeholder.
10. Citigroup Inc. (NYSE:C)
Berkshire Hathaway’s Stake Value: $3,505,834,818
Sector: Financial Services
Industry: Insurance – Property & Casualty
Citigroup Inc. (NYSE:C) is an American multinational investment banking and financial services company. Berkshire Hathaway did not change its position in the company during the second quarter of 2024. The hedge fund owned over 55.2 million shares in the company at the end of the quarter, with a value of over $3.5 billion. The company represented 1.25% of Buffett’s portfolio.
The recent stress test reaffirmed the strength of Citigroup Inc. (NYSE:C)’s balance sheet, reflected in a CET1 ratio of 13.6%. As a result, the company is increasing its dividend by 6%. Significant strides have been made in streamlining operations, both strategically and organizationally. In addition, the company is modernizing its infrastructure to improve client service and automating processes to enhance controls. In its latest earnings report, the company emphasized its commitment to continuing its transformation and strategic execution to meet its medium-term goals and enhance returns over time. The stock has delivered a 13.7% return to shareholders since the start of 2024.
Diamond Hill Capital highlighted Citigroup Inc. (NYSE:C)’s restructuring efforts in its Q1 2024 investor letter. Here is what the firm has to say:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
Citigroup Inc. (NYSE:C) is a strong dividend payer with a low payout ratio of just 34%. It currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 3.71%, as of August 21. It is one of the best Warren Buffett dividend stocks with 34 consecutive years of dividend payments.
According to Insider Monkey’s database of Q2 2024, 85 hedge funds held stakes in Citigroup Inc. (NYSE:C), compared with 94 in the previous quarter. These stakes have a collective value of over $10.6 billion. Ken Fisher’s Fisher Asset Management was one of the company’s leading stakeholders in Q2.
9. Chubb Limited (NYSE:CB)
Berkshire Hathaway’s Stake Value: $6,895,777,623
Sector: Financial Services
Industry: Insurance – Property & Casualty
Chubb Limited (NYSE:CB) is an insurance company that offers a wide range of related products and services to its consumers. Investing in insurance companies generally doesn’t lead to quick, substantial returns. However, they are reliable businesses that steadily grow over time. The company’s business model focuses on building personalized customer relationships through a network of independent agents, offering coverage options that are often hard to find with other insurers. The stock has surged by nearly 20% this year so far.
Chubb Limited (NYSE:CB)’s cash position remained strong in the second quarter of 2024. The company generated $4.08 billion in operating cash flow and its free cash flow came in at $3.57 billion. During the quarter, it returned $369 million to shareholders in dividends, coming through as one of the best Warren Buffett dividend stocks on our list. Its revenue for the quarter came in at $11.78 billion, up 10.29% from the same period last year.
Berkshire began purchasing Chubb Limited (NYSE:CB) shares in the third quarter of 2023 and continued to increase its holdings over the next three quarters. It now owns over 27 million shares, representing a $6.9 billion investment that constitutes 2.46% of its portfolio.
Chubb Limited (NYSE:CB) currently offers a quarterly dividend of $0.91 per share, having raised it by 6% in May this year. This was the company’s 31st consecutive year of dividend growth. The stock offers a dividend yield of 1.34%, as of August 21.
Insider Monkey’s database of Q2 2024 indicated that 46 hedge funds owned stakes in Chubb Limited (NYSE:CB), down from 53 in the preceding quarter. These stakes have a collective value of over $8 billion.
8. Moody’s Corporation (NYSE:MCO)
Berkshire Hathaway’s Stake Value: $10,384,249,654
Sector: Financials
Industry: Financial Data & Stock Exchanges
Moody’s Corporation (NYSE:MCO) ranks eighth on our list of the best Warren Buffett dividend stocks. It is an American financial services company that offers credit ratings and analytical solutions to investors and businesses. The company’s credit ratings and risk analysis businesses continue to perform well. It also offers research and risk management services to clients in the financial services, corporate, and public sectors. The company reported strong earnings in the second quarter of 2024, driven by the success of its top-rated ratings franchise. It reported revenue of $1.8 billion, which showed a 21% growth from the same period last year. The double-digit revenue growth supported product development and innovation. In addition, the company formed several promising strategic partnerships with leading industry firms to expand the availability and reach of its data and insights.
Warren Buffett initially acquired Moody’s Corporation (NYSE:MCO) in 2000, following its spin-off from Dun & Bradstreet. The hedge fund maintained a steady stake in the company, except for a single instance in 2010 when it reduced its holdings to raise funds for acquisitions. At the end of Q2 2024, it owned nearly 25 million shares in the company, worth over $10.3 billion. The company represented 3.7% of the firm’s 13F portfolio.
Moody’s Corporation (NYSE:MCO), one of the best Warren Buffett dividend stocks, has raised its payouts for 14 consecutive years. The company currently offers a quarterly dividend of $0.85 per share and has a dividend yield of 0.71%, as of August 21.
As per Insider Monkey’s database of Q2 2024, 59 hedge funds owned stakes in Moody’s Corporation (NYSE:MCO), compared with 60 in the previous quarter. The consolidated value of these stakes is nearly $21 billion. In addition to Berkshire Hathaway, TCI Fund Management was also one of the company’s leading stakeholders in Q2.
7. The Kraft Heinz Company (NASDAQ:KHC)
Berkshire Hathaway’s Stake Value: $10,491,953,836
Sector: Consumer Staples
Industry: Packaged Foods
The Kraft Heinz Company (NASDAQ:KHC) is an Illinois-based food company that deals in a wide range of snacks and beverages. Buffett first invested in H.J. Heinz Co. in 2013, aiding 3G Capital in acquiring the company. He was also involved in facilitating the merger with Kraft in 2015. Despite this, Buffett has openly acknowledged to investors that the Kraft Heinz investment has not been among his best choices. He began to decrease his investment in the company after 2018 due to challenges facing the industry. Kraft Heinz attempted to boost growth through an acquisition bid for Unilever, but the offer was rejected by the owner of Popsicle. In 2019, the company faced a challenging quarter, during which the company significantly reduced its dividend. Despite this setback, Buffett continued to support his investment. The company responded by planning to increase its spending on marketing and advertising and to change its approach to developing new products. That said, the company has ultimately proven to be a long-term investment for him. As of the end of Q2 2024, The Kraft Heinz Company (NASDAQ:KHC) is the seventh-largest holding of Berkshire Hathaway. The hedge fund owned nearly 326 million shares in the company, worth $10.5 billion. The company made up 3.74% of the firm’s portfolio.
The Kraft Heinz Company (NASDAQ:KHC) reported a robust cash position during the first six months of FY24, which is crucial for a company that pays dividends. The company’s operating cash flow for the quarter came in at $1.7 billion, which showed an 8.1% growth from the same period last year. Its free cash flow for the period was $1.2 billion, up 8.7% from the prior-year period. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 4.52%, as of August 21.
At the end of June 2024, 43 hedge funds tracked by Insider Monkey owned stakes in The Kraft Heinz Company (NASDAQ:KHC), which remained unchanged from the previous quarter. These stakes are valued at more than $11 billion in total.
6. Occidental Petroleum Corporation (NYSE:OXY)
Berkshire Hathaway’s Stake Value: $16,090,394,458
Sector: Energy
Industry: Oil & Gas E&P
Occidental Petroleum Corporation (NYSE:OXY) is an American energy company that is engaged in the exploration of hydrocarbon and is also involved in the manufacturing of petrochemicals. In contrast to Chevron, OXY is primarily focused on domestic operations, with 80% of its production projected to come from the US in 2022. The strength of the company’s operational performance led to strong financial results for the second quarter of 2024. The company is enthusiastic about maintaining this positive momentum through its extensive and varied asset portfolio, now enhanced by the addition of CrownRock.
Occidental Petroleum Corporation (NYSE:OXY) is optimistic about its recent acquisition. The company has set a goal to reduce its debt principal by at least $4.5 billion within a year of completing the CrownRock acquisition. To achieve this, the company plans to use a mix of excess free cash flow and funds from asset sales. Occidental anticipates that CrownRock will increase its free cash flow by $1 billion per year at an oil price of $70 (with current crude oil prices around $75) and aims to sell between $4.5 billion and $6 billion in assets in the future.
In the second quarter of 2024, Occidental Petroleum Corporation (NYSE:OXY) reported an operating cash flow of $2.4 billion and its free cash flow before working capital amounted to $1.3 billion. The company currently pays a quarterly dividend of $0.22 per share for a dividend yield of 1.57%, as of August 21. It is among the best Warren Buffett dividend stocks on our list.
Warren Buffett initially invested in Occidental Petroleum Corporation (NYSE:OXY) in 2019, during the company’s search for financing to acquire Anadarko Petroleum. Since then, Berkshire has significantly increased its stake in OXY, leading some to speculate that Buffett might aim to acquire the entire company. During the second quarter of 2024, the hedge fund increased its stake in the company by 3% and now owns over 255 million OXY shares, worth over $16 billion. The company constituted 5.74% of the firm’s 13F portfolio.
At the end of the second quarter of 2024, 62 hedge funds held stakes in Occidental Petroleum Corporation (NYSE:OXY), up from 61 in the previous quarter. These stakes are collectively valued at over $18.5 billion.
5. Chevron Corporation (NYSE:CVX)
Berkshire Hathaway’s Stake Value: $18,553,059,728
Sector: Energy
Industry: Oil & Gas Integrated
Chevron Corporation (NYSE:CVX) ranks fifth on our list of the best Warren Buffett dividend stocks. The American energy company is known for its generous dividends, maintaining regular payouts since 1984. Moreover, the company has raised its dividends consistently for the past 37 years. It currently offers a quarterly dividend of $0.63 per share and has a dividend yield of 4.49%, as of August 21.
Oil companies have traditionally preferred using dividends as a way to return capital to shareholders. Even during periods of low oil prices, they often take on debt and leverage their assets to maintain these payouts. However, Chevron Corporation (NYSE:CVX) stands out from this trend. The company is attracting investors due to its strong cash flow, which provides a reliable cushion against the volatility of oil prices. In the second quarter of 2024, the company reported an operating cash flow of $6.3 billion and its free cash flow came in at $2.3 billion. Due to this solid cash flow generation, it returned $6 billion to shareholders through dividends and share repurchases. This marked the company’s ninth consecutive quarter of providing over $5 billion in shareholder returns.
Warren Buffett started building its position in Chevron Corporation (NYSE:CVX) during the third quarter of 2020 with shares worth over $3 billion. Over the years, his hedge fund has gradually increased its stake in the company. In the second quarter of 2024, the fund made a slight adjustment to its stake in CVX, reducing it by 4%. Still, it is the firm’s fifth-largest holding, making up 6.62% of its portfolio.
As of the end of the June quarter of 2024, 64 hedge funds tracked by Insider Monkey held stakes in Chevron Corporation (NYSE:CVX), up from 62 in the previous quarter. These stakes have a total value of over $22.4 billion.
4. The Coca-Cola Company (NYSE:KO)
Berkshire Hathaway’s Stake Value: $25,460,000,000
Sector: Consumer Staples
Industry: Beverages—Non-Alcoholic
The Coca-Cola Company (NYSE:KO) is the oldest holding of Berkshire Hathaway. The hedge fund started investing in the company in 1988. In 2023, Buffett noted that Berkshire’s $1.3 billion investment in Coke, made from the late 1980s through the mid-1990s, has been fully justified by the dividend payments alone. In 2022, Coke paid out $704 million in annual dividends. Last year, Berkshire received $736 million in dividends from Coke, and it is expected to receive $776 million this year. At the end of Q2 2024, the hedge fund owned 400 million KO shares, worth over $25.4 billion. The company represented over 9% of the firm’s 13F portfolio.
This indicates that The Coca-Cola Company (NYSE:KO) is highly valued for its dividends. However, the real factor behind this popularity is the company’s strong cash flow. In the second quarter of 2024, the company reported an operating cash flow of $4.1 billion and its free cash flow came in at $3.3 billion. The Coca-Cola Company (NYSE:KO) is one of the best Warren Buffett dividend stocks as the company has been rewarding shareholders with growing dividends for 62 consecutive years. Currently, it pays a quarterly dividend of $0.485 per share and has a dividend yield of 2.79%, as of August 21.
Insider Monkey’s database of Q2 2024 indicated that 68 hedge funds owned stakes in The Coca-Cola Company (NYSE:KO), growing from 62 in the preceding quarter. These stakes are worth nearly $32 billion in total.
3. American Express Company (NYSE:AXP)
Berkshire Hathaway’s Stake Value: $35,105,457,585
Sector: Financials
Industry: Credit Services
American Express Company (NYSE:AXP) is an American multinational bank holding and financial services company. The stock is up by nearly 31% since the start of 2024 despite investors’ concerns about slowing consumer spending and the increasing rates of charge-offs and delinquencies in the banking sector. The company gains from significant network effects. Since the end of 2021, it has substantially expanded its operations, boosting revenues by nearly 50 percent and increasing Card Member spending by almost 40 percent. Additionally, it has issued approximately 23 million new cards and expanded to over 30 million merchant locations. In the second quarter of 2024, the company reported revenue of $16.3 billion, up 8.50% from the same period last year. The growth was mainly driven by higher net interest income, increased Card Member spending, and continued strong growth in card fees.
Artisan Partners highlighted the company’s strong business momentum in its Q1 2024 investor letter. Here is what the firm has to say about American Express Company (NYSE:AXP):
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
Buffett began investing in American Express Company (NYSE:AXP) in 1991 by purchasing preferred stock, which he later converted to common stock in 1994. The hedge fund did not change its position in the company during the second quarter of 2024 and owned nearly 152 million AXP shares, worth over $35 billion. The company made up 12.53% of Warren Buffett’s portfolio.
American Express Company (NYSE:AXP), one of the best Warren Buffett dividend stocks, raised its payouts twice this year. Currently, it offers a quarterly dividend of $0.70 per share and has a dividend yield of 1.14%, as of August 21.
The number of hedge funds tracked by Insider Monkey owning stakes in American Express Company (NYSE:AXP) grew to 68 in Q2 2024, from 66 a quarter earlier. The collective value of these stakes is over $38.4 billion. Fisher Asset Management was one of the company’s leading stakeholders in Q2.
2. Bank of America Corporation (NYSE:BAC)
Berkshire Hathaway’s Stake Value: $41,076,524,279
Sector: Financials
Industry: Banks—Diversified
Bank of America Corporation (NYSE:BAC) ranks second on our list of the best Warren Buffett dividend stocks. Although the company remains Berkshire Hathaway’s second-largest holding at the end of Q2 2024, the hedge fund sold its shares in the company in late July and early August. In total, the hedge fund sold 90,422,124 shares, raising approximately $3.82 billion. Due to this, the stock declined by over 10% between July 17 and August 1. Analysts speculate that the decision to divest from BAC may be related to the bank’s sensitivity to interest rate changes. This transaction is not included in the Q2 2024 13F filing, which only covers purchases and sales up to June 30. The fund owned over 1 billion shares in the company, worth more than $41 billion. BAC represented 14.67% of the firm’s 13F portfolio.
Despite ongoing pressure from interest rates on financial stocks, analysts believe that Bank of America Corporation (NYSE:BAC) is now in a favorable position. ClearBridge Investments highlighted this in its Q1 2024 investor letter. Here is what the firm has to say:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
Bank of America Corporation (NYSE:BAC) currently pays a quarterly dividend of $0.26 per share, having raised it by 8% in July this year. It is one of the best Warren Buffett dividend stocks as the company has never missed a dividend in over 26 years. The stock supports a dividend yield of 2.68%, as of August 21.
The number of hedge funds tracked by Insider Monkey owning stakes in Bank of America Corporation (NYSE:BAC) jumped to 92 in Q2 2024, from 82 in the preceding quarter. These stakes are collectively valued at more than $48 billion.
1. Apple Inc. (NASDAQ:AAPL)
Berkshire Hathaway’s Stake Value: $84,248,000,000
Sector: Information Technology
Industry: Consumer Electronics
Apple Inc. (NASDAQ:AAPL) tops our list of the best Warren Buffett dividend stocks. The hedge fund reduced its massive stake in the tech giant during the second quarter of 2024, which was unexpected given Buffett’s reputation for long-term investing. The fund’s AAPL stake was valued at $84.2 billion at the end of the second quarter, indicating that Buffett had sold just over 49% of the tech investment. Despite this reduction, the company remained by far Berkshire’s largest stock holding. Buffett had already cut the Apple stake by 13% in the first quarter and mentioned at the Berkshire annual meeting in May that the sales were partly for tax reasons. He suggested that selling “a little Apple” this year could benefit Berkshire shareholders in the long run if future US tax policy increases capital gains taxes to address a growing fiscal deficit. The company represented over 30% of the firm’s 13F portfolio.
Where Berkshire slashed its AAPL stake, Baron Funds reinitiated its position in Apple Inc. (NASDAQ:AAPL) during the second quarter of 2024. The firm highlighted the strengths in the company’s business in its Q2 2024 investor letter:
“This quarter we re-initiated a position in Apple Inc. (NASDAQ:AAPL), a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on[1]device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
Apple Inc. (NASDAQ:AAPL) reported strong earnings in its fiscal Q3 2024. The company’s revenue for the quarter came in at $85.7 billion, which saw a 4.8% growth from the same period last year. In addition, its cash position was also stable, generating $29 billion in operating cash flow. The company returned $32 billion to shareholders through dividends and share repurchases.
Apple Inc. (NASDAQ:AAPL) currently offers a quarterly dividend of $0.25 per share and has a dividend yield of 0.44%, as of August 21. In May this year, the company raised its dividend for the 12th consecutive year.
Apple Inc. (NASDAQ:AAPL) was a popular stock among elite funds during Q2 2024, as per Insider Monkey’s database. The hedge fund positions in the company jumped to 184 in Q2, from 150 in the previous quarter. The stakes owned by these hedge funds have a collective value of more than $124 billion.
While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than AAPL but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
