In this article, we discuss the 10 dividend stocks in Warren Buffett’s latest portfolio.
Warren Buffett, the Omaha-born chief of Berkshire Hathaway, has become a global brand over the years due to his investment exploits that have inspired many to follow in his footsteps. However, even though Buffett is now 91-years-old, there aren’t many who have had as much success as him in the finance world. The portfolio value of his hedge fund, according to the latest 13F filings, was in the excess of $293 billion at the end of September 2021. His personal net worth stood at around $103 billion at the time.
Buffett manages a small but incredibly powerful portfolio at Berkshire Hathaway. Regulatory filings show that between June and September this year, his fund made new purchases in just two stocks, additional purchases in 1, sold out of 3, and reduced holdings in 7 equities. The top ten holdings of the portfolio, dominated by dividend-paying, stable businesses, comprise more than 88% of the total. Technology, financial, consumer goods, and services are some of the prominent sectors in the portfolio.
The claim to fame for Buffett has no doubt been a value investing strategy that places quality above quantity. By shrewd investments in solid, cash-flowing businesses at the right time, Buffett averaged an annual return of more than 20% for some five decades beginning in the 1960s. Some of the top dividend stocks in the latest portfolio of Warren Buffett include Johnson & Johnson (NYSE:JNJ), STORE Capital Corporation (NYSE:STOR), and Bristol-Myers Squibb Company (NYSE:BMY), among others discussed in detail below.
Our Methodology
These were picked from the investment portfolio of Berkshire Hathaway at the end of the third quarter of 2021. Only those stocks with forward dividend yields of 2% or more were selected.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Dividend Stocks in Warren Buffett’s Latest Portfolio
10. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 62
Forward Dividend Yield: 2.99%
The Coca-Cola Company (NYSE:KO) is a beverage company that makes and sells non-alcoholic drinks. At the end of the third quarter of 2021, Berkshire Hathaway owned 400 million shares in the company worth $20.9 billion, representing 7.15% of the portfolio.
Morgan Stanley analyst Dara Mohsenian has an Overweight rating on The Coca-Cola Company (NYSE:KO) stock with a price target of $65. In a recent investor note, the analyst said that the purchase of sports drinks maker Body Armor for $5.6 billion made “strategic sense” for the company.
Among the hedge funds being tracked by Insider Monkey, Nebraska-based firm Berkshire Hathaway is a leading shareholder in The Coca-Cola Company (NYSE:KO) with 400 million shares worth more than $21 billion.
Just like Johnson & Johnson (NYSE:JNJ), STORE Capital Corporation (NYSE:STOR), and Bristol-Myers Squibb Company (NYSE:BMY), The Coca-Cola Company (NYSE:KO) is one of the stocks on the radar of elite investors.
9. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 33
Forward Dividend Yield: 4.32%
The Kraft Heinz Company (NASDAQ:KHC) markets packaged foods and meat products. The stock has soared in recent weeks as pricing powers allow the company to offset inflationary pressures. Kraft Heinz also recently beat market estimates on earnings per share and revenue for the third quarter, lifting full-year guidance numbers as well.
Berkshire Hathaway owned 325 million shares in The Kraft Heinz Company (NASDAQ:KHC) at the end of September 2021 worth $11.9 billion, representing 4.08% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in The Kraft Heinz Company (NASDAQ: KHC) with 325 million shares worth more than $13 billion.
In its Q4 2020 investor letter, Berkshire Hathaway highlighted a few stocks and The Kraft Heinz Company (NASDAQ:KHC) was one of them. Here is what the firm said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
8. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 63
Forward Dividend Yield: 4.95%
Verizon Communications Inc. (NYSE:VZ) is an integrated telecommunications company based in New York. Securities filings show that Berkshire Hathaway owned 158 million shares in the company at the end of the third quarter of 2021 worth $8.5 billion, representing 2.92% of the portfolio.
Cowen analyst Colby Synesael recently raised the price target on Verizon Communications Inc. (NYSE: VZ) stock to $71 from $68 and kept an Outperform rating on the shares, noting the stock seemed “meaningfully undervalued” in light of strong earnings.
At the end of the second quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $10.9 billion in Verizon Communications Inc. (NYSE:VZ), down from 69 in the previous quarter worth $11.3 billion.
In its Q1 2021 investor letter, Miller/Howard Investments, an asset management firm, highlighted a few stocks and Verizon Communications Inc. (NYSE:VZ) was one of them. Here is what the fund said:
“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”
7. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 41
Forward Dividend Yield: 3.10%
U.S. Bancorp (NYSE:USB) is a financial services holding firm. It recently announced that it would be acquiring TravelBank as part of a plan to ramp up investments in the digital ecosystem of the bank. TravelBank is a fintech company that provides one-stop travel and expense management solutions.
According to the latest data, Berkshire Hathaway owned 126 million shares in U.S. Bancorp (NYSE:USB) at the end of September 2021 worth $7.5 billion, representing almost 2.56% of the portfolio of the fund.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $8.30 billion in U.S. Bancorp (NYSE:USB), down from 43 the preceding quarter worth $8.33 billion.
In its Q4 2020 investor letter, Mairs & Power, an asset management firm, highlighted a few stocks and U.S. Bancorp (NYSE:USB) was one of them. Here is what the fund said:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
6. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 52
Forward Dividend Yield: 2.34%
The Bank of New York Mellon Corporation (NYSE:BK) operates in the asset management and custody banks business. Regulatory filings show that Berkshire Hathaway owned 72 million shares in the company at the end of the third quarter of 2021 worth over $3.7 billion, representing 1.27% of the portfolio.
On October 22, investment advisory Citi maintained a Buy rating on The Bank of New York Mellon Corporation (NYSE:BK) stock and raised the price target to $70 from $60, noting the firm was “well-positioned for higher rates”.
At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in The Bank of New York Mellon Corporation (NYSE:BK), up from 49 the preceding quarter worth $4.7 billion.
In addition to Johnson & Johnson (NYSE:JNJ), STORE Capital Corporation (NYSE:STOR), and Bristol-Myers Squibb Company (NYSE:BMY), The Bank of New York Mellon Corporation (NYSE:BK) is one of the stocks that hedge funds are buying.
5. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 50
Forward Dividend Yield: 4.57%
Chevron Corporation (NYSE:CVX) is an integrated oil and gas company headquartered in California. It recently spent $47 million bidding on a federal auction of oil leases in the US Gulf of Mexico. The oil firm was the biggest spender at the auction that saw other energy giants like Exxon in participation. Officials say $192 million was raised through the exercise.
Latest securities filings reveal that Berkshire Hathaway owned 28 million shares in Chevron Corporation (NYSE:CVX) at the end of the third quarter of 2021 worth $2.9 billion.
At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in Chevron Corporation (NYSE:CVX), up from 41 in the preceding quarter worth $4.8 billion.
In its Q1 2021 investor letter, ClearBridge Investments highlighted a few stocks and Chevron Corporation (NYSE:CVX) was one of them. Here is what the fund said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names, (including) Chevron. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
4. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
Forward Dividend Yield: 4.81%
AbbVie Inc. (NYSE:ABBV) develops and markets pharmaceutical products. Berkshire Hathaway owned 14 million shares in the company at the end of September 2021 worth $1.5 billion, representing 0.52% of the portfolio of the fund.
Morgan Stanley analyst David Risinger has an Overweight rating on AbbVie Inc. (NYSE:ABBV) stock with a price target of $124. In an investor note penned in early November, the analyst appreciated the strong quarterly earnings of the pharma firm.
At the end of the second quarter of 2021, 82 hedge funds in the database of Insider Monkey held stakes worth $5.3 billion in AbbVie Inc. (NYSE:ABBV), up from 72 in the preceding quarter worth $5.9 billion.
3. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 73
Forward Dividend Yield: 3.32%
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based pharmaceutical company. The firm posted earnings for the third quarter in late October, reporting earnings per share of $2.00, beating estimates by $0.08. The revenue over the period was $11.6 billion, smashing expectations by $100 million.
The hedge fund of billionaire Warren Buffett owned over 22 million shares of Bristol-Myers Squibb Company (NYSE:BMY) at the end of the third quarter of 2021 worth more than $1.3 billion, representing 0.44% of the portfolio of the fund.
At the end of the second quarter of 2021, 73 hedge funds in the database of Insider Monkey held stakes worth $4.5 billion in Bristol-Myers Squibb Company (NYSE:BMY), down from 81 in the preceding quarter worth $5.7 billion.
In its Q4 2020 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Bristol-Myers Squibb Company (NYSE:BMY) was one of them. Here is what the fund said:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
2. STORE Capital Corporation (NYSE:STOR)
Number of Hedge Fund Holders: 13
Forward Dividend Yield: 4.55%
STORE Capital Corporation (NYSE: STOR) is a real estate investment trust that owns and manages single tenant properties. The firm has an impressive dividend history and recently declared a quarterly dividend of $0.385 per share, an increase of 7% from the previous dividend of $0.360.
According to regulatory filings, Berkshire Hathaway owned 24 million shares in STORE Capital Corporation (NYSE: STOR) at the end of September 2021 worth $782 million.
At the end of the second quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $899 million in STORE Capital Corporation (NYSE: STOR), the same as in the previous quarter worth $886 million.
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Forward Dividend Yield: 2.61%
Johnson & Johnson (NYSE:JNJ) makes and sells a range of healthcare products across the globe. Latest data shows that Berkshire Hathaway owned 327,100 shares of the company at the end of the third quarter of 2021 worth $52 million in value.
Johnson & Johnson (NYSE:JNJ) stock has been hit in recent days after rival Pfizer, which has developed an experimental version of the COVID-19 pill, announced that it would be allowing licensed generic drug makers to produce cheaper versions of the product.
At the end of the second quarter of 2021, 88 hedge funds in the database of Insider Monkey held stakes worth $7 billion in Johnson & Johnson (NYSE:JNJ), up from 81 in the previous quarter worth $6.9 billion.
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Disclosure. None. 10 Dividend Stocks in Warren Buffett’s Latest Portfolio is originally published on Insider Monkey.
