Below are the 5 best dividend stocks to buy according to Warren Buffett. For a comprehensive list and Buffett’s investment strategy please see 10 Best Dividend Stocks To Buy According To Warren Buffett.
5. The Kraft Heinz Company (NASDAQ: KHC)
Berkshire Hathaway first initiated a position in The Kraft Heinz Company (NASDAQ: KHC) in 2015. The consumer staples company offers a dividend yield of 4%. The company slashed its dividend in 2018 and offers a quarterly dividend of $0.40 per share over the last two years. Despite that, it is one of the best dividend stocks to buy according to Warren Buffett.
Here is what Berkshire stated about Kraft Heinz in their fourth-quarter investor letter:
“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.”
4. American Express Company (NYSE: AXP)
The financial services company American Express Co (NYSE: AXP) is a long-running investment of Warren Buffett’s Berkshire. The firm held a stake worth $18.33 billion in AXP at the end of the latest quarter. Shares of AXP surged 18% year to date, extending ten-year gains to 218%. The company is also well known for offering robust cash returns. It currently offers a quarterly dividend of $0.43 per share. American Express raised dividends in the last two straight years while its 10-year average dividend growth rate hovers around 9.10%.
In one of their investor letters, Bretton Fund commented on a few stocks including American Express. Here is what Bretton Fund stated:
“American Express has elements of both a bank (it extends credit card loans) and a payments processor (most of its revenue is fees from cardholders and merchants) and was hit pretty hard by Covid-19, though we expect most of the impact will be transitory. It has a relatively diversified customer base overall, but a meaningful portion of its card activity is from business travel, which…there wasn’t a lot of last year. Similar to the banks, American Express recognized loan losses in anticipation of large defaults, though it’s not clear all of that will come to pass. Its stock returned -1.1%, while earnings per share were down 53%.”
3. The Coca-Cola Company (NYSE: KO)
The consumer staples company Coca-Cola (NYSE: KO) is a dividend king amid its history of increasing dividends in the past 58 successive years. Berkshire first initiated a position KO in 2001. The stock holding represented 8.13% of the overall portfolio at the end of the latest quarter. The company offers a quarterly dividend of $0.42 per share at present, yielding above 3.20%.
The number of long hedge fund bets increased by 2 lately. The Coca-Cola Company was in 62 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic is 62. This means the bullish number of hedge fund positions in this stock currently sits at its all-time high. Our calculations also showed that KO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
2. Bank of America Corporation (NYSE: BAC)
The banking giant Bank of America Corporation (NYSE: BAC) is in the list of best dividend stocks to buy according to Warren Buffett. This is because the bank has a history of offering substantial cash returns to shareholders. Excluding the pandemic year, the company had increased dividends at a high double-digit rate in the past five years. Its dividend yield is currently hovering close to 2%.
GoodHaven Capital Management, a concentrated portfolio investment management firm, bought Bank of America shares in the last six months. Here is what GoodHaven Capital Management stated in the Q4 investor letter:
“Finally, the Federal Reserve has just relaxed share buyback restrictions for Bank of America (and some of their brethren) – a positive development. We added to Bank of America during the last six months. We continue to find plenty of potential new investments to consider, even after the market’s recent material rebound.”
1. Apple Inc. (NASDAQ: AAPL)
Apple is the largest stock holding of Berkshire Hathaway’s 13F portfolio at the end of the December quarter, accounting for 43.6% of the portfolio – down 6% from the previous quarter. The firm has been collecting more than $750 million in dividends from its Apple stake. While Apple’s dividend yield is quite low due to sharp share price gains, the company has the potential to make big raises in dividends.
In their Q4 investor letter, Saturna Capital Corporation presented a bullish outlook for Apple. Here is what Saturna Capital said:
“Technology claimed six of the 10 Largest Contributors for 2020, demonstrating the effect of the pandemic, remote work, and the acceleration of various Technology and Consumer trends. Apple followed closely behind. More than once we have read Apple obituaries, but we believe the company’s combination of hardware and services will continue to drive the business for years to come, and we look forward to improved availability for the iPhone 12 Pro.”
You can also take a peek at Billionaire Izzy Englander’s Top 10 Stock Picks and 10 Best Tech Stocks To Buy Now According To Billionaire Laffont.
