In this article, we discuss Warren Buffett’s 5 favorite dividend stocks for the rest of 2022. If you want to read our detailed analysis of Buffett’s investment strategy, go directly to read Warren Buffett’s 10 Favorite Dividend Stocks for the Rest of 2022.
5. American Express Company (NYSE:AXP)
Berkshire Hathaway’s Stake Value: $21,016,276,000
Dividend Yield as of August 17: 1.27%
American Express Company (NYSE:AXP) is a New York-based credit card services company that issues personal, small business, and corporate credit cards. Warren Buffett has been investing in the company for over 25 years and his total unrealized gain on the stock stood at over $26 billion. In Q2 2022, Berkshire Hathaway owned over 151.6 million AXP shares, worth over $21 billion. The company represented 7% of Warren Buffett’s portfolio.
American Express Company (NYSE:AXP) holds a very strong dividend history, paying dividends to shareholders consistently for the past 30 years. It currently offers $0.52 per share in the quarterly dividend, with a dividend yield of 1.27%, as of August 17.
American Express Company (NYSE:AXP)’s billing activity remained strong in Q2 2022, reaching pre-pandemic levels and its revenue has also shown growth over the years. In view of this, RBC Capital raised its price target on American Express Company (NYSE:AXP) in July to $180 with a Sector Perform rating on the shares.
At the end of Q1 2022, 69 hedge funds in Insider Monkey’s database reported owning stakes in American Express Company (NYSE:AXP), up from 64 in the previous quarter. These stakes have a total value of over $33 billion. With nearly $3 billion worth of stakes, Fisher Asset Management was one of the most prominent stakeholders of the credit card company in Q1.
4. Chevron Corporation (NYSE:CVX)
Berkshire Hathaway’s Stake Value: $23,373,304,000
Dividend Yield as of August 17: 3.59%
Berkshire Hathaway initiated its position in Chevron Corporation (NYSE:CVX) during the third quarter of 2020 and has raised its stake significantly since then. In Q2 2022, the hedge fund owned stakes worth over $23.3 billion in the oil company, marking a big jump from its value of $4.5 billion at the end of 2021. The company is the fund’s fourth-largest holding and accounted for 7.78% of Warren Buffett’s portfolio in Q2.
On July 27, Chevron Corporation (NYSE:CVX) declared a quarterly dividend of $1.42 per share, in line with its previous dividend. The company has raised its dividends for 35 years in a row. As of August 17, the stock’s dividend yield came in at 3.59%.
In August, Credit Suisse assumed its coverage of Chevron Corporation (NYSE:CVX) with an Outperform rating and an unchanged price target of $202.
As shown by Insider Monkey’s data, 53 hedge funds were bullish on Chevron Corporation (NYSE:CVX) in Q1 2022, the same as in the previous quarter. The stakes owned by these hedge funds hold a collective value of nearly $28 billion.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm has to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
The Coca-Cola Company (NYSE:KO)
Berkshire Hathaway’s Stake Value: $25,164,000,000
Dividend Yield as of August 17: 2.71%
Berkshire Hathaway started investing in The Coca-Cola Company (NYSE:KO) in 1988, with shares worth over $1 billion. The hedge fund has reaped massive gains from its position in the beverage company. Moreover, the fund’s dividend payments from the company have grown from $88 million in 1995 to $672 million in 2021. The hedge fund owned 400 million KO shares in Q2 2022, valued at over $25 billion. The Georgia-based company represented 8.38% of Warren Buffett’s portfolio.
The Coca-Cola Company (NYSE:KO) holds one of the longest dividend growth streaks in the US market, raising its dividends consistently for the past 60 years. The company offers a quarterly dividend of $0.44 per share, with a dividend yield of 2.71%, as of August 17.
As of the close of Q1 2022, 64 hedge funds tracked by Insider Monkey owned stakes in The Coca-Cola Company (NYSE:KO), compared with 70 a quarter earlier. These stakes are collectively valued at over $29 billion. In addition to Warren Buffett, Rajiv Jain and Ray Dalio were also some of the company’s most prominent stakeholders in Q1.
ClearBridge Investments mentioned The Coca-Cola Company (NYSE:KO) in its Q4 2021 investor letter. Here is what the firm had to say:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
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.”
1. Apple Inc. (NASDAQ:AAPL)
Berkshire Hathaway’s Stake Value: $122,337,373,000
Dividend Yield as of August 17: 0.53%
Apple Inc. (NASDAQ:AAPL) was the largest holding of Berkshire Hathaway in Q2 2022, as the hedge fund owned over 894 million shares in the tech company, valued at $122.3 billion. The hedge fund started building its position in the company in 2016 and since then Buffett’s bet has soared to over $160 billion. At the end of Q2, the company represented 40.7% of Warren Buffett’s portfolio.
Apple Inc. (NASDAQ:AAPL) pays a quarterly dividend of $0.23 per share, with a dividend yield of 0.53%, as recorded on August 17. The company maintains a 9-year track record of consistent dividend growth.
In August, Wedbush raised its price target on Apple Inc. (NASDAQ:AAPL) to $220 and maintained an Outperform rating on the shares.
At the end of Q1 2022, 131 hedge funds in Insider Monkey’s database owned stakes in Apple Inc. (NASDAQ:AAPL), down from 134 a quarter earlier. The total value of these stakes is over $182 billion.
Wedgewood Partners mentioned Apple Inc. (NASDAQ:AAPL) in its recently-published Q2 2022 investor letter. Here is what the firm has to say:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
You can also take a look at 10 Important Dividend Increases to Watch in August and 10 Best Blue Chip Dividend Stocks to Buy in August
