In this article we will be taking a look at 10 dividend stocks Warren Buffett is backing in 2022.
In investment circles today, Warren Buffett is a name everyone is bound to be familiar with. He is an American investor and philanthropist who is currently the chairman and CEO of Berkshire Hathaway, a multinational conglomerate holding company based in the US. As of March 2022, Buffett has a net worth of over $117 billion, making him the sixth-wealthiest person on the planet. He studied at the Wharton School of the University of Pennsylvania, and later transferred and graduated from the University of Nebraska when he was 19. Later, he graduated from Columbia Business School. It is here that Buffett innovated the investment philosophy which turned him into a billionaire, drawing from the concept of value investing, first pioneered by Benjamin Graham.
What is Value Investing?
Value investing is an investment strategy that focuses on companies with cheap valuation metrics and low multiples of profits and assets. A value investor then buys these stocks which trade at a significant discount to their intrinsic value. Buffett invests following the Benjamin Graham school of value investing, looking at securities with incredibly low prices when compared to their intrinsic worth. Through this investment philosophy, investors must consider companies as a whole, instead of looking at isolated factors that influence investment decisions.
Buffett’s Berkshire Hathaway invests primarily in technology and financial stocks. Some of its major investments include Apple Inc. (NASDAQ:AAPL), The Coca-Cola Company (NYSE:KO), Verizon Communications (NYZE:VZ), and Chevron Corporation (NYSE:CVX).
We can now take a look at the 10 dividend stocks Warren Buffett is backing in 2022.
Our Methodology:
Using Insider Monkey’s fourth quarter of 2021 hedge fund data, we have picked dividend stocks that are not only among Warren Buffett’s select options, but also those that are popular among hedge funds today. We tracked 924 hedge funds in the fourth quarter, yielding extensive information on hedge fund sentiment surrounding these stocks, which aided in our selection process. We have also mentioned analyst ratings for all the stocks listed below, ensuring they have mostly positive ratings.
Dividend Stocks Warren Buffett is Backing in 2022
10. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 94
Dividend Yield: 2.1%
Wells Fargo & Company (NYSE:WFC), a US-based multinational financial services company, offers a range of banking, investment, mortgage, and consumer and commercial finance products and services. Berkshire Hathaway holds about 675,054 shares in the company, worth over $30 million, according to its 13F holdings.
In February, JPMorgan’s Vivek Juneja reiterated a Neutral rating on Wells Fargo & Company (NYSE:WFC) shares.
In the fiscal fourth quarter of 2021, Wells Fargo & Company (NYSE:WFC) had an EPS of $1.25, beating estimates by $0.25 The company’s revenue was $20.9 billion, beating estimates by $2.2 billion. Wells Fargo & Company (NYSE:WFC) has also gained 7% in the past six months.
In the fourth quarter of 2021, 94 hedge funds were long Wells Fargo & Company (NYSE:WFC) with a total stake value of $6.1 billion. The largest stakeholder in the company was Eagle Capital Management, holding 20,037,841 shares worth over $961 million.
L1 Capital, an investment management firm, mentioned Wells Fargo & Company (NYSE:WFC) in its fourth-quarter 2021 investor letter. Here’s what they said:
“Detailed, bottom-up stock research remains the investment team’s primary focus and the core driver of portfolio performance. 2021 once again demonstrated the team’s ability to identify ‘winners’ through extensive company and industry research across a diverse range of sectors. Key contributors included Wells Fargo & Company (NYSE:WFC), (due to its) improving compliance and operational performance, falling bad debts and progress towards removal of ‘asset cap’. Exited our holding in June at a >50% gain.”
Like The Coca-Cola Company (NYSE:KO), Verizon Communications (NYZE:VZ), and Chevron Corporation (NYSE:CVX), Wells Fargo & Company (NYSE:WFC) is an exceptional dividend stock Warren Buffet has been backing this year.
9. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 84
Dividend Yield: 2.2%
Bank of America Corporation (NYSE:BAC) is an American investment bank and financial services holding company. It is based in North Carolina. The company has grown its dividend for eight years, making it one of the most reliable dividend stocks Warren Buffett is backing in 2022.
Bank of America Corporation (NYSE:BAC) was upgraded to Neutral recently by Baird analysts.
This February it was also reported that Bank of America Corporation (NYSE:BAC) was amongst the few stocks whose stock prices helped Berkshire Hathaway’s net income more than double in the fourth quarter, to $89.8 billion.
Our hedge fund data shows 84 hedge funds out of 924 hedge funds holding stakes in Bank of America Corporation (NYSE:BAC) in the fourth quarter of 2021. In the previous quarter, 72 hedge funds were long the stock.
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 67
Dividend Yield: 2.4%
The Procter & Gamble Company (NYSE:PG) is a consumer staples company providing branded consumer packaged goods under the brands Olay, Old Spice, Pantene, and many others. The company has raised its dividend consistently for the past 65 years.
This January, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating on shares of The Procter & Gamble Company (NYSE:PG).
The company’s EPS in the fiscal second quarter of 2022 was $1.66, beating estimates by $0.01. Its revenue also beat estimates by $617.4 million, standing at $20.9 billion.
The Procter & Gamble Company (NYSE:PG) had 67 hedge funds holding stakes in it in the fourth quarter of 2021. Out of these hedge funds, GQG Partners was its largest stakeholder, holding 7,531,883 shares in the company, worth over $1.2 billion.
Owing to its impressive history of dividend increases, The Procter & Gamble Company (NYSE:PG) is among the most reliable dividend stocks to invest in, like The Coca-Cola Company (NYSE:KO), Verizon Communications (NYZE:VZ), and Chevron Corporation (NYSE:CVX).
7. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Dividend Yield: 2.5%
Johnson & Johnson (NYSE:JNJ) is a healthcare and pharmaceuticals company operating internationally. Some of the company’s subsidiaries include Janssen Pharmaceuticals and Janssen Cilag. Berkshire Hathaway holds 327,100 shares in the company according to its 13F holdings, thus the company is a vital part of Buffett’s investment portfolio. It is one of the best dividend stocks Warren Buffett is backing in 2022, with a total stake value of over $55 million.
Johnson & Johnson (NYSE:JNJ) was reinstated with a Neutral rating at Bank of America Corporation recently by analyst Geoff Meacham.
In the fourth quarter of 2021, Johnson & Johnson (NYSE:JNJ) had an EPS of $2.13, beating estimates by $0.01. Its revenue was $24.8 billion, beating the previous quarter’s revenue of $23.3 billion.
Out of 924 hedge funds, 83 hedge funds were long Johnson & Johnson (NYSE:JNJ) in the fourth quarter of 2021. Comparatively, 88 hedge funds held stakes in the company in the previous quarter.
6. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 49
Dividend Yield: 2.7%
The Bank of New York Mellon Corporation (NYSE:BK) is also known as BNY Mellon. It is a US-based investment banking services holding company, with headquarters in New York. The company makes up 1.26% of Buffett’s investment portfolio, and is one of the dividend stocks Warren Buffett is backing in 2022 as well.
Deutsche Bank’s Brian Bedell holds a Buy rating on The Bank of New York Mellon Corporation (NYSE:BK) shares as of this February.
This January, The Bank of New York Mellon Corporation (NYSE:BK) reported that its fourth-quarter earnings beat consensus estimates. The EPS was $1.04, beating estimates by $0.03, while the revenue of $4.02 billion also beat estimates by $41.4 million. Additionally, the company’s assets under management reached $2.4 trillion, up 10% year over year. This development reflects higher market values and net inflows.
Insider Monkey’s fourth quarter hedge fund data shows 49 hedge funds long The Bank of New York Mellon Corporation (NYSE:BK), with a total stake value of $5.2 billion. The largest stakeholder in the company was Buffett’s Berkshire Hathaway, holding 72,357,453 shares worth over $4.2 billion of this amount.
The Bank of New York Mellon Corporation (NYSE:BK) is amongst the most prized stocks on Buffett’s investment portfolio, as seen by his vast stake in the company. As such, it is among the best dividend stocks to buy in 2022, alongside The Coca-Cola Company (NYSE:KO), Verizon Communications (NYZE:VZ), and Chevron Corporation (NYSE:CVX).
5. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 70
Dividend Yield: 3%
The Coca-Cola Company (NYSE:KO) is among the largest beverage companies operating multinational today. The company markets and sells a range of non-alcoholic drinks under the brands Coca-Cola, Fanta, Sprite, and many others. The stock makes up 7.15% of Buffett’s investment portfolio, and has paid consistent dividends to its shareholders for the past 59 years. As such, it is one of the best dividend stocks Warren Buffett is backing in 2022.
Evercore ISI analyst Robert Ottenstein holds an Outperform rating on shares of The Coca-Cola Company (NYSE:KO) as of this February.
Just this February, The Coca-Cola Company (NYSE:KO) raised its dividend yet again, declaring a now $0.44 per share quarterly dividend. This marks a significant increase of 4.8% from the previous dividend of $0.42.
Out of 924 hedge funds, 70 hedge funds were long The Coca-Cola Company (NYSE:KO) in the fourth quarter of 2021. Their total stake value was $28.6 billion.
4. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
Dividend Yield: 3.3%
Chevron Corporation (NYSE:CVX), an American multinational energy corporation, is among the dividend stocks Warren Buffett is backing in 2022. Buffett recently increased his stake in the company by 34%. The company is based in San Ramon, California, and actively operates in over 180 countries.
Jeanine Wai, an analyst at Barclays, holds an Overweight rating on shares of Chevron Corporation (NYSE:CVX) as of this March.
Chevron Corporation (NYSE:CVX) raised its share buyback guidance this March from $3 to $5 billion per year to $5 to $10 billion per year, based on an advantaged portfolio and balance sheet, according to the company’s CFO, Pierre Breber. The increases in buybacks, alongside the company’s dividend, are expected to increase the cash returned to shareholders by over 50%, compared to last year.
Chevron Corporation (NYSE:CVX) had 53 hedge funds holding stakes in it in the fourth quarter of 2021, compared to 51 hedge funds in the previous quarter. Their total stake values were $6.5 billion and $4.4 billion respectively.
3. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 46
Dividend Yield: 3.4%
U.S. Bancorp (NYSE:USB) is a bank holding company with headquarters in Minneapolis, Minnesota. The company is the parent company of U.S. Bank National Association and is also the fifth-largest financial institution in the US. It is one of the dividend stocks Warren Buffett is backing in 2022, and makes up 2.14% of his investment portfolio.
JPMorgan’s Vivek Juneja holds an Overweight rating on U.S. Bancorp (NYSE:USB) shares as of this February.
The company was noted to have bought Union Bank and double deposit market share in California, using its share currency, in December. Analyst Erika Najarian at UBS, while noting this positive development, initiated coverage of U.S. Bancorp (NYSE:USB) with a Buy rating in December 2021.
In the fourth quarter of 2021, 46 hedge funds were long U.S. Bancorp (NYSE:USB) out of 924 hedge funds. Their total stake value was $7.9 billion, compared to the previous quarter’s total stake value of $8.4 billion, with 42 hedge funds holding stakes in the company.
2. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 39
Dividend Yield: 4.1%
The Kraft Heinz Company (NASDAQ:KHC), also known as Kraft Heinz, is a US-based food company operating internationally. The company was formed by merging Kraft Foods and Heinz. Making up about 3.53% of Buffett’s investment portfolio according to Berkshire Hathaway’s latest 13F holdings, it is among the dividend stocks Warren Buffett is backing in 2022.
Stifel’s Cristopher Growe has a Hold rating on The Kraft Heinz Company (NASDAQ:KHC) shares as of this February.
The company’s fiscal fourth quarter of 2021 EPS was $0.79, beating estimates by $0.16. The Kraft Heinz Company (NASDAQ:KHC) also beat revenue estimates by $64.4 million, with its $6.7 billion revenue. The stock has gained 2.4% in the past six months and 2.9% year to date as well.
Our hedge fund data shows 39 hedge funds holding stakes in The Kraft Heinz Company (NASDAQ:KHC) in the fourth quarter. Their total stake value was $12.2 billion.
1. Verizon Communications (NYZE:VZ)
Number of Hedge Fund Holders: 63
Dividend Yield: 4.8%
Verizon Communications (NYZE:VZ) is a US-based telecommunications conglomerate. The company is part of the Dow Jones Industrial Average, and is among the dividend stocks Warren Buffett is backing in 2022. It has raised its dividend for the past 17 years, making it a reliable stock pick.
Tigress Financial analyst Ivan Feinseth holds a Buy rating on Verizon Communications (NYZE:VZ) shares as of this January.
The company’s EPS in the fourth quarter of 2021 was $1.31, beating estimates by $0.03. Its revenue was $34.1 billion, also beating estimates by $30.6 million.
The number of hedge funds holding stakes in Verizon Communications (NYZE:VZ) in the fourth quarter of 2021 was 63, compared to 57 hedge funds in the previous quarter. Their total stake values were $10.9 billion and $10.4 billion respectively.
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Disclosure: None. 10 Dividend Stocks Warren Buffett is Backing in 2022 is originally published on Insider Monkey.
