In this article, we discuss 11 best dividend stocks to buy according to Warren Buffett. You can skip our detailed analysis of Buffett’s investment strategies and his fund’s recent developments, and go directly to read 5 Best Dividend Stocks to Buy According to Warren Buffett.
As expected, Warren Buffett is using the current market selloff as an opportunity. During the second quarter of 2022, he increased his stakes in Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Activision Blizzard, Inc. (NASDAQ:ATVI). He is also a big fan of dividend stocks. Buffett has been investing in dividend stocks since the very beginning of his investment career. As of the second quarter of 2022, approximately 90% of companies in his portfolio pay dividends, and most of these companies hold decades-long dividend growth track records. In one of his interviews with Business Insider, the billionaire mentioned that profitable businesses always initiated their dividend policies to increase shareholder value.
At the end of Q2 2022, Berkshire Hathaway’s 13F portfolio had a value of over $300 billion, down from $363.5 billion in the previous quarter. Technology and finance made up a major portion of the portfolio in Q2. The hedge fund has a total of 47 holdings and it closed its position in two stocks during the quarter. In this article, we will discuss the best dividend stocks to buy according to Warren Buffett.
Our Methodology:
For this list, we took dividend stocks from Berkshire Hathaway’s 13F portfolio, as of the second quarter of 2022. The stocks are ranked according to their stake value in the portfolio.
Best Dividend Stocks to Buy According to Warren Buffett
11. Mondelez International, Inc. (NASDAQ:MDLZ)
Berkshire Hathaway’s Stake Value: $35,888,000
Dividend Yield as of October 17: 2.67%
Mondelez International, Inc. (NASDAQ:MDLZ) is a Chicago-based food company that specializes in different beverages and snacks. Berkshire Hathaway started investing in the company during the second quarter of 2012 with shares worth over $326.8 million. In Q2 2022, the hedge fund owned 578,000 MDLZ shares, valued at over $35.8 million. The fund did not change its position in the company during the quarter. The company represented 0.01% of Buffett’s 13F portfolio.
On July 28, Mondelez International, Inc. (NASDAQ:MDLZ) declared a 10% hike in its quarterly dividend to $0.385 per share. This was the company’s eighth consecutive year of dividend growth, coming through as one of the best dividend stocks on our list. As of October 17, the stock’s dividend yield stood at 2.67%.
In September, Cowen initiated its coverage of Mondelez International, Inc. (NASDAQ:MDLZ) and a $71 price target. The firm mentioned that the company offers advantaged consumer and category exposure, which is enough to support its above-consensus outlook.
At the end of Q2 2022, 48 hedge funds tracked by Insider Monkey owned stakes in Mondelez International, Inc. (NASDAQ:MDLZ), the same as in the previous quarter. The collective value of these stakes is over $1.78 billion. Two Sigma Advisors was the company’s leading stakeholder in Q2.
In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Activision Blizzard, Inc. (NASDAQ:ATVI), Mondelez International, Inc. (NASDAQ:MDLZ) is an important stock in Warren Buffett’s portfolio.
10. The Procter & Gamble Company (NYSE:PG)
Berkshire Hathaway’s Stake Value: $45,351,000
Dividend Yield as of October 17: 2.86%
The Procter & Gamble Company (NYSE:PG) is one of America’s leading consumer goods companies with headquarters in Ohio. The company specializes in a wide range of personal care and hygiene products. It holds one of the longest dividend growth streaks in the market, having raised its dividends consistently for the past 66 years. Moreover, the company has a record of paying consecutive dividends for 132 years, which makes it one of the best dividend stocks. It offers a quarterly dividend of $0.9133 per share for a dividend yield of 2.86%, as recorded on October 17.
Berkshire Hathaway opened its position in The Procter & Gamble Company (NYSE:PG) during the fourth quarter of 2010, purchasing shares worth roughly $5 billion. Over the years, the hedge fund reduced its position in the company and by the end of Q2, the fund owned stakes worth over $45.3 million. The company represented 0.01% of the fund’s 13F portfolio.
In October, UBS maintained a Neutral rating on The Procter & Gamble Company (NYSE:PG) with a $135 price target. The firm noted that the underlying trends will likely remain strong for the company’s Household and Personal Care segments.
As of the close of Q2 2022, 71 hedge funds tracked by Insider Monkey owned investments in The Procter & Gamble Company (NYSE:PG), down from 72 in the previous quarter. These investments are collectively valued at over $5.5 billion.
9. Johnson & Johnson (NYSE:JNJ)
Berkshire Hathaway’s Stake Value: $58,064,000
Dividend Yield as of October 17: 2.71%
Johnson & Johnson (NYSE:JNJ) is an American multinational pharmaceutical company that also specializes in other household and consumer products. Recently, the company’s board announced the authorization of a buyback program for $5 billion worth of stock. This was because of the company’s strong free cash flow and low debt levels in five years.
Johnson & Johnson (NYSE:JNJ) has been a part of Berkshire Hathaway’s portfolio since the fourth quarter of 2010. The hedge fund initiated its position in the company with shares worth over $2.6 billion. In Q2 2022, the hedge fund owned 327,100 JNJ shares, worth over $58 million. The company accounted for 0.01% of Warren Buffett’s portfolio in Q2.
Johnson & Johnson (NYSE:JNJ) currently pays a quarterly dividend of $1.13 per share and has a dividend yield of 2.71%, as of October 17. The company has been raising its dividends consistently for the past 60 years, coming through as one of the best dividend stocks on our list.
In October, Citigroup reiterated its Buy rating on Johnson & Johnson (NYSE:JNJ) with a $198 price target. The firm mentioned that the next quarter will bring in positive earnings for medical supplies and tech sectors.
As of the close of Q2 2022, 83 hedge funds tracked by Insider Monkey owned stakes in Johnson & Johnson (NYSE:JNJ), with a total value of over $6.7 billion. In the previous quarter, 83 hedge funds owned stakes in the pharmaceutical company as well, worth over $7.4 billion.
Distillate Capital Partners LLC mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter. Here is what the firm has to say:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
8. The Bank of New York Mellon Corporation (NYSE:BK)
Berkshire Hathaway’s Stake Value: $3,018,027,000
Dividend Yield as of October 17: 3.67%
The Bank of New York Mellon Corporation (NYSE:BK) is an American investment banking holding company that provides related services to its consumers. On October 17, the company announced a quarterly dividend of $0.37 per share, in line with its previous dividend. The company has paid uninterrupted dividends to shareholders for the past 21 years, which places it as one of the best dividend stocks on our list. As of October 17, the stock’s dividend yield came in at 3.67%.
Berkshire Hathaway has been investing in The Bank of New York Mellon Corporation (NYSE:BK) since 2010 when the hedge fund purchased a stake worth over $54 million in the company. In Q2 2022, the hedge fund owned over 72.3 million BK shares, valued at over $3 billion. The company represented 1% of Warren Buffett’s portfolio.
In October, Citigroup upgraded The Bank of New York Mellon Corporation (NYSE:BK) to Buy with a $46 price target, highlighting the company’s strong return outlook and capital return capacity. The firm also mentioned that the company has an upside to net interest income estimates.
At the end of June 2022, 38 hedge funds in Insider Monkey’s database owned stakes in The Bank of New York Mellon Corporation (NYSE:BK), down from 54 in the previous quarter. These stakes are collectively valued at over $3.6 billion. First Eagle Investment Management was one of the company’s leading stakeholders in Q2.
Ariel Investments mentioned The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter. Here is what the firm has to say:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
7. U.S. Bancorp (NYSE:USB)
Berkshire Hathaway’s Stake Value: $5,513,432,000
Dividend Yield as of October 17: 4.53%
U.S. Bancorp (NYSE:USB) is a Minnesota-based financial services company and is one of the largest banking institutions in the US. In October, JPMorgan maintained an Overweight rating on the stock with a $46 price target. The firm presented a positive outlook on the banking stocks in this current market environment.
At the end of the second quarter of 2022, Berkshire Hathaway owned nearly 120 million shares of U.S. Bancorp (NYSE:USB), with a total value of over $5.5 billion. The hedge fund reduced its stake in the company by 6%, which represented 1.83% of the firm’s 13F portfolio.
On September 13, U.S. Bancorp (NYSE:USB) declared a 4% hike in its quarterly dividend to $0.48 per share. This was the company’s 12th consecutive year of dividend increase. As of October 17, the stock’s dividend yield came in at 4.53%.
The number of hedge funds tracked by Insider Monkey having stakes in U.S. Bancorp (NYSE:USB) stood at 43 in Q2 2022, growing from 40 in the previous quarter. The collective value of these stakes is over $6.5 billion. In addition to Warren Buffett, Ken Griffin, Jim Simons, and Donald Yacktman were some other prominent shareholders of the company in Q2.
ClearBridge Investments mentioned U.S. Bancorp (NYSE:USB) in its Q4 2021 investor letter. Here is what the firm has to say:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We have increased our exposure to interest-rate sensitive banks by adding to existing positions in U.S. Bancorp.”
6. Moody’s Corporation (NYSE:MCO)
Berkshire Hathaway’s Stake Value: $6,709,439,000
Dividend Yield as of October 17: 1.15%
Moody’s Corporation (NYSE:MCO) is a New York-based bond credit rating company that also provides services related to financial intelligence. Berkshire Hathaway started investing in the company in 2001, purchasing shares worth over $249 million. In Q2 2022, the hedge fund owned roughly 25 million shares in the company, with a total value of over $6.7 billion. The company represented 2.23% of Warren Buffett’s portfolio. The company is one of the firm’s most prominent holdings alongside Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Activision Blizzard, Inc. (NASDAQ:ATVI).
Moody’s Corporation (NYSE:MCO) is one of the best dividend stocks on our list as the company holds a 12-year track record of consistent dividend growth. It pays $0.70 per share in quarterly dividends and has a yield of 1.15, as of October 17.
In October, JPMorgan reiterated its Overweight rating on Moody’s Corporation (NYSE:MCO) with a $290 price target, appreciating the company’s fundamentals in this challenging environment.
As of the close of Q2 2022, 48 hedge funds owned stakes in Moody’s Corporation (NYSE:MCO), compared with 56 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of nearly $1.2 billion. TCI Fund Management is one of the company’s largest stakeholders in Q2.
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Disclosure. None. 11 Best Dividend Stocks to Buy According to Warren Buffett is originally published on Insider Monkey.
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