Warren Buffett’s Top 5 Dividend Stock Picks

In this article, we discuss top 10 dividend stocks to buy according to Warren Buffett. If you want to read our detailed analysis of Berkshire Hathaway’s performance and Buffett’s investment strategy, go directly to read Warren Buffett’s Top 10 Dividend Stock Picks. 

5. The Kraft Heinz Company (NASDAQ:KHC)

Berkshire Hathaway’s Stake Value: $10,859,921,000
Dividend Yield as of November 18: 4.22%

The Kraft Heinz Company (NASDAQ:KHC) is a Chicago-based multinational food company that operates over 20 brands. The company has been offering dividends to shareholders even before the merger of Kraft and Heinz in 2015. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 4.22%, as of November 18.

BNP Paribas initiated its coverage of The Kraft Heinz Company (NASDAQ:KHC) in November with a Neutral rating and a $39 price target. The firm mentioned that US packaged food group has historically outperformed the wider market.

Berkshire started building its position in The Kraft Heinz Company (NASDAQ:KHC) during the third quarter of 2015, purchasing shares worth roughly $23 billion. During Q3 2022, the hedge fund did not change its position in the company and owned a $10.8 billion worth of KHC stake. The company represented 3.66% of Warren Buffett’s portfolio.

At the end of September 2022, 40 hedge funds tracked by Insider Monkey owned stakes in The Kraft Heinz Company (NASDAQ:KHC), compared with 41 in the previous quarter. These stakes are collectively worth over $11.8 billion.

4. American Express Company (NYSE:AXP)

Berkshire Hathaway’s Stake Value: $20,453,800,000
Dividend Yield as of November 18: 1.36%

American Express Company (NYSE:AXP) is an American multinational credit card service company. At the end of Q3 2022, Berkshire owned over 151.6 million shares in the company, worth over $20.4 billion. The hedge fund did not change its position in the company during the quarter. It represented 6.9% of Warren Buffett’s portfolio. Moreover, Buffett has earned over $25 billion from the company since he started investing in it 25 years ago.

BMO Capital raised its price target on American Express Company (NYSE:AXP) to $166 in October with a Market Perform rating on the shares, following the company’s earnings beat in the recent quarter. The firm also appreciated the company’s higher net interest income.

American Express Company (NYSE:AXP) has been making consecutive dividend payments for the past 30 years. The company currently pays a quarterly dividend of $0.52 per share and has a dividend yield of 1.36%, as of November 18.

Of the 920 hedge funds tracked by Insider Monkey in Q3 2022, 68 funds owned stakes in American Express Company (NYSE:AXP), compared with 67 in the previous quarter. These stakes are collectively valued at roughly $25 billion.

3. Coca-Cola Company (NYSE:KO)

Berkshire Hathaway’s Stake Value: $22,407,999,000
Dividend Yield as of November 18: 2.88%

An American multinational beverage company, Coca-Cola Company (NYSE:KO) is one of the strongest dividend stocks in the US market. The company has been raising its dividends consistently for the past 60 years. Currently, it pays a per-share dividend of $0.44 every quarter and has a dividend yield of 2.88%, as of November 18.

Coca-Cola Company (NYSE:KO) first invested over $1 billion in Coca-Cola Company (NYSE:KO) in 1988. The hedge fund has earned millions in dividends from the company, which amounted to $672 million in 2021. At the end of Q3 2022, the fund owned over 400 million KO shares, worth over $22.4 billion. The company accounted for 7.56% of Warren Buffett’s portfolio.

Street analysts appreciated the quarterly earnings of Coca-Cola Company (NYSE:KO). In October, both UBS and Barclays raised their price targets on the stock to $68 and $67, respectively.

As of the close of Q3 2022, 59 hedge funds tracked by Insider Monkey owned stakes in Coca-Cola Company (NYSE:KO), with a total value of over $25 billion.

Aristotle Capital Management, LLC mentioned The Coca-Cola Company (NYSE:KO) in its Q2 2022 investor letter. Here is what the firm has to say:

“The Coca-Cola Company (NYSE:KO), the global beverage business, was a leading contributor for the period. Coca-Cola continues to benefit from the refranchising of its bottling operations and realignment of incentives, catalysts we previously identified. These initiatives are demonstrating their strength in an inflationary and supply-chain-challenged environment. Additionally, the company has focused on evolving its customer engagement practices by leveraging digital and social medias for targeted campaigns, such as the design and launch of Coke Byte in the metaverse. Lastly, Coca-Cola has furthered its transformation into a total beverage company, as it debuted its new Jack Daniel’s Tennessee Whiskey and Coca-Cola ready-to-drink premixed cocktail. Although uncertainties surrounding cost pressures, lockdowns and geopolitical conflicts remain, we believe Coca-Cola is uniquely positioned to successfully continue its transition toward a total beverage business.”

2. Chevron Corporation (NYSE:CVX)

Berkshire Hathaway’s Stake Value: $23,757,173,000
Dividend Yield as of November 18: 3.15%

Chevron Corporation (NYSE:CVX) is an American multinational energy company. During Q3 2022, Berkshire Hathaway increased its position in the company by 3%, which takes the firm’s total stake in the company to over $23.7 billion. The company represented 8.02% of Warren Buffett’s portfolio.

Chevron Corporation (NYSE:CVX) is one of the top dividend stocks on our list as it has a 25-year run of raising its dividends. The company pays a quarterly dividend of $1.42 per share for a dividend yield of 3.15%, as of November 18.

In November, Piper Sandler gave a positive outlook on integrated oil companies due to high demand. In view of this, the firm raised its price target on the stock to $206 with an Overweight rating on the shares.

The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) jumped to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion.

Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had 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.”

1. Bank of America Corporation (NYSE:BAC)

Berkshire Hathaway’s Stake Value: $30,505,039,000
Dividend Yield as of November 18: 2.33%

Bank of America Corporation (NYSE:BAC) is an American multinational financial services holding company. As banks are well-positioned to benefit from the higher interest rates and benign credit quality, JPMorgan raised its price target on BAC in November to $39 with an Overweight rating on the shares.

Berkshire Hathaway has been investing in Bank of America Corporation (NYSE:BAC) since 2011. The company was the second-largest holding of the firm at the end of the third quarter of 2022. The fund owned BAC shares worth over $30.5 billion, which represented 10.3% of its 13F portfolio.

Bank of America Corporation (NYSE:BAC) currently pays a quarterly dividend of $0.22 per share and has a dividend yield of 2.33%, as of November 18. The company has been raising its dividends consistently for the past nine years, which makes it one of the top dividend stocks in Warren Buffett’s portfolio.

Bank of America Corporation (NYSE:BAC) was a part of 97 hedge fund portfolios in Q3 2022, down from 99 in the previous quarter, according to Insider Monkey’s data. The stakes owned by these hedge funds have a total value of over $35.6 billion.

Here is what Artisan Partners said about Bank of America Corporation (NYSE:BAC) in its Q2 2022 investor letter:

“We made only one new purchase during the quarter, initiating a position in Bank of America (BAC). As one of America’s largest banks, Bank of America Corporation (NYSE:BAC) is second only to JPMorgan Chase (JPM) in size and is probably its closest peer. Both are well-run banks, but compared to JPM, since the GFC, BAC has retired more shares, grown EPS faster and currently has more capital and a lower dividend payout. We are attracted to BAC’s strong capital base, high capital generation capacity, large loan loss reserve, low (~50%) loan/deposit ratio, short duration investment securities book, and low dividend payout that provides financial flexibility. BAC has a less volatile earnings stream than JPM with lower capital market sensitive exposures. Additionally, BAC is rigorously stress tested by the Fed every year in quantitative and qualitative fashion. Warren Buffett’s Berkshire Hathaway, which we hold in the portfolio, owns 12% of BAC. He petitioned the Fed to own more than 10%, so he clearly likes it. Bank stocks were strong gainers in 2021 on the prospects of higher rates boosting net interest margins, but the stocks pulled back in the first half of 2022 on economic concerns. We believe BAC has massive scale advantages, should benefit from increasing interest rates, particularly in the 2-year part of the yield curve, and should grow over time with the economy. The economic environment is highly uncertain, but current consensus includes the provision for losses more than doubling and capital markets activity slowing. Against that backdrop, our purchase price equated to about 8.5X our estimates of “mid-cycle” earnings. With leading businesses, a double-digit ROE, a prudent capital return strategy and a strong balance sheet, we believe this entry point offers a solid long-term value.”

You can also take a look at Billionaire Ken Fisher’s Top 10 Dividend Stock Picks and Billionaire Seth Klarman’s Top 9 Dividend Stock Picks

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