Most investors think that to generate significant wealth from the stock markets, one needs to routinely hit home runs by finding multi-bagger stocks for their portfolios. However, legendary investors like Warren Buffett have proved time and again that to generate superior returns all one needs to do is invest in companies with stable cash flows and consistent earnings growth. Research shows that in the long run such companies, through a combination of share price appreciation, dividend payouts, and/or stock buyback programs, deliver much better returns to their shareholders than the broader market. At Insider Monkey, we pay special attention to 58 of the 800 funds and institutional investors that we track as part of our small-cap strategy (see more details here), as those funds were founded by or are currently headed by billionaires who have lengthy track records of excellence. Given these billionaire investors’ penchant for investing in companies which boast a consistent history of making dividend payments, we have compiled a list of their favorite dividend aristocrat stocks, companies which have increased their annual dividend payments for at least he past 25 years.
#5 The Coca-Cola Co (NYSE:KO)
– Billionaires with Long Positions (as of December 31): 10
– Value of Billionaires’ Holdings (as of December 31): $800.8 million
Let’s start with beverage giant The Coca-Cola Co (NYSE:KO), which is currently trading up by 2.44% year-to-date and very close to its lifetime high. During the fourth quarter, billionaire investors in our system with long positions in the stock inched down by three, but the aggregate value of their holdings in the company saw an increase of over $1 billion. The Coca-Cola Co (NYSE:KO), has a multi-decade history of consistently paying dividends to its stockholders and recently hiked its quarterly dividend to $0.35 per share from $0.33 per share, which currently represents an annual dividend yield of nearly 3.20%. Though most analysts continue to have a positive outlook on the company, some feel that its stock has become overvalued due to the rise it has experienced over the past few months. On March 5, analysts at Susquehanna reiterated their ‘Hold’ rating on the stock. With ownership of 400.00 million shares Warren Buffett’s Berkshire Hathaway continued to remain the largest shareholder of The Coca-Cola Co among the funds in our database at the end of the fourth quarter.
#4 PPG Industries, Inc. (NYSE:PPG)
– Billionaires with Long Positions (as of December 31): 11
– Value of Billionaires’ Holdings (as of December 31): $784 million
Despite its stock appreciating by 12.7% and its ownership among the billionaire investors that we track increasing by one during the fourth quarter the aggregate value of these investors’ holding in PPG Industries, Inc. (NYSE:PPG) saw a fall of 9.8% during that time. Led by an over 11% rally in the past month, PPG Industries, Inc. (NYSE:PPG)’s stock is currently trading up by 4.6% year-to-date. However, it still sports a respectable annual dividend yield of 1.40%. On February 29, auto parts distribution company LKQ Corporation (NASDAQ:LKQ) announced that it has agreed to acquire Pittsburgh Glass Works, in which PPG Industries, Inc. holds a nearly 40% stake, for $635 million. On February 11, analysts at Credit Suisse lowered their price target on PPG Industries’ stock to $91.34 from $102 while keeping their rating on it unchanged at ‘Outperform’. Billionaire David Tepper‘s Appaloosa Management LP initiated a stake in the company during the October-to-December period, purchasing 751,154 shares.