Warren Buffett’s 5 Favorite Dividend Stocks for the Rest of 2022

2. Bank of America Corporation (NYSE:BAC)

Berkshire Hathaway’s Stake Value: $31,444,432,000
Dividend Yield as of August 17: 2.43%

Berkshire Hathaway opened its position in Bank of America Corporation (NYSE:BAC) in 2011 and has raised its stake ever since. The company’s total cost base was $14.6 billion then, which has now doubled in its value as the hedge fund owned a BAC stake worth over $31.4 billion in Q2 2022. The financial services company was the second-largest holding of the fund and represented 10.47% of Warren Buffett’s portfolio.

On July 20, Bank of America Corporation (NYSE:BAC) hiked its quarterly dividend by 5% to $0.22 per share. This marked the company’s 9th consecutive year of dividend growth. As of August 17, the stock’s dividend yield came in at 2.43%.

In July, Societe Generale upgraded Bank of America Corporation (NYSE:BAC) to Buy with a $37.5 price target, highlighting the company’s loan portfolio and sensitivity to rising interest rates.

At the end of Q1 2022, 99 hedge funds in Insider Monkey’s database owned stakes in Bank of America Corporation (NYSE:BAC), up from 84 in the previous quarter. These stakes are collectively valued at over $45.4 billion.

Miller Value Partners mentioned Bank of America Corporation (NYSE:BAC) in its Q1 2022 investor letter. Here is what the firm has to say:

“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.

A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).

We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”