Warren Buffett’s Dividend Portfolio: 5 Stocks to Watch

2. Bank of America Corporation (NYSE:BAC)

Dividend Yield as of May 19: 2.41%
Quarterly Dividend: $0.21 per share

In April, Morgan Stanley highlighted the higher loan portfolio of Bank of America Corporation (NYSE:BAC) along with its strong credit quality. The firm upgraded the stock to Equal Weight, with a $49 price target.

Berkshire Hathaway started building its position in Bank of America Corporation (NYSE:BAC) in 2011, with shares worth over $5 billion. At the end of Q1 2022, the hedge fund owned $41.6 billion worth of shares in the company, which represented 11.4% of Warren Buffett’s portfolio.

At the end of Q4 2021, 84 hedge funds tracked by Insider Monkey held stakes in Bank of America Corporation (NYSE:BAC), up from 72 in the previous quarter. These stakes hold a consolidated value of over $47.8 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.”