In this article, we discuss 12 best Warren Buffett dividend stocks to buy now. You can skip our detailed analysis of Buffett's dividend investment strategy and the importance of dividend stocks, and go directly to read 5 Best Warren Buffett Dividend Stocks To Buy Now.
Warren Buffett is a legendary investor whose reputation precedes him in the investment world. His successful investment strategies have inspired countless investors to emulate his approach. The CEO of Berkshire Hathaway focuses on long-term value and seeks out companies with strong fundamentals and competitive advantages. For Buffett, dividend investing is not about pursuing the highest yield. Instead, he focuses on finding exceptional companies that have the potential to sustain and increase their dividends for the long term. He finds a moderate dividend yield from a strong and prosperous company much more attractive than a high yield from a weak and unstable one.
Buffett's commitment to long-term investments is evident in his ownership of The Coca-Cola Company (NYSE:KO). In 1994, the cash dividend Berkshire received from KO was $75 million on its $1.3 billion investment in the company. Last year, this dividend payment increased significantly to $704 million. Morningstar reported Buffett’s comments on Coke’s dividend growth:
“Growth occurred every year, just as certain as birthdays. All [business partner Charlie Munger] and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.”
American Express Company (NYSE:AXP) is another example of Buffett's successful investments. Berkshire acquired American Express shares in 1995 for a sum equal to the Coca-Cola purchase. Over the years, the dividends paid to Berkshire from American Express have grown significantly, from $41 million in 1995 to $302 million last year.
Berkshire Hathaway did not reinvest the dividends it received from Coca-Cola and American Express back into those stocks, which is a common practice among investors to boost returns over time. Instead, its ownership in both companies grew through buybacks made over the years.
Dividend stocks have proven their importance with strong past performance over the years. From 1993 to the end of 2022, the S&P 500 rose by 777%. However, when including dividends, the S&P 500 increased by over 1,400% during the same period. This shows that dividends made up over 20% of the market’s total return during this period.
Most of the companies Buffett invests in pay dividends. This year, Berkshire Hathaway is projected to receive approximately $5.7 billion in cash from its stock portfolio, as per an analysis by Dow Jones Market Data. This impressive sum includes $1 billion in dividends from Chevron Corporation (NYSE:CVX), as the oil producer continues its remarkable streak of increasing dividend payments for 36 consecutive years. This indicates that the investments made by Buffett and his team have been successful in generating significant returns. In addition to Cola Company (NYSE:KO), American Express Company (NYSE:AXP), and Chevron Corporation (NYSE:CVX), we will further mention some of the best dividend stocks that Warren Buffett owns.
12 Best Warren Buffett Dividend Stocks To Buy Now
Our Methodology:
For this list, we analyzed Berkshire Hathaway's 13F portfolio as of Q1 2023 and focused on companies that regularly pay dividends to their shareholders. Among these, we selected the 12 stocks that had the highest number of hedge fund investors, as tracked by Insider Monkey at the end of Q1 2023.
The Kraft Heinz Company (NASDAQ:KHC) is an American food and beverage company that operates in the consumer packaged goods industry. It was formed in 2015 as a result of the merger between Kraft Foods and H.J. Heinz Company.
According to the latest data from Nielsen and Numerator, sales of packaged food are on the rise, and this growth is gaining momentum. The increase in pricing is playing a role in offsetting the weakness in product volume. Moreover, the S&P Food & Beverage Select Industry is up 1.61% year-to-date, as of July 18. The Kraft Heinz Company (NASDAQ:KHC) is one of the best dividend stocks on our list as it has been paying regular dividends to shareholders since its merger in 2015. The company pays a quarterly dividend of $0.40 per share and has a dividend yield of 4.50%, as recorded on July 18. Other best dividend stocks according to Buffett are Cola Company (NYSE:KO), American Express Company (NYSE:AXP), and Chevron Corporation (NYSE:CVX). At the end of Q1 2023, 34 hedge funds tracked by Insider Monkey reported having stakes in The Kraft Heinz Company (NASDAQ:KHC), compared with 39 in the previous quarter. These stakes have a consolidated value of over $13 billion.
Number of Hedge Fund Holders: 43 The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates as a supermarket chain. It is involved in the business of selling groceries, general merchandise, and other essential items. In the first quarter of 2023, the company reported revenue of $45.1 billion, which showed a 1.3% growth from the same period last year. Its operating cash flow for the quarter increased to over $2.8 billion, from $1.1 billion in the prior-year quarter. On June 22, The Kroger Co. (NYSE:KR) declared an 11.5% hike in its quarterly dividend to $0.29 per share. Through this increase, the company took its dividend growth streak to 17 years, which makes it one of the best dividend stocks on our list. The stock's dividend yield on July 18 came in at 2.49%. At the end of Q1 2023, 43 hedge funds in Insider Monkey's database owned stakes in The Kroger Co. (NYSE:KR), up from 42 a quarter earlier. These stakes have a total value of roughly $4 billion. In addition to Buffett, Cliff Asness, Brandon Haley, and D. E. Shaw were some of the company's other prominent stakeholders.
Number of Hedge Fund Holders: 60 McKesson Corporation (NYSE:MCK) is next on our list of the best dividend stocks that Warren Buffett owns. The company operates as a pharmaceutical distributor and healthcare information technology provider. On April 27, the company declared a quarterly dividend of $0.54 per share, which was in line with its previous dividend. In 2022, it stretched its dividend growth streak to six years. As of July 18, the stock has a dividend yield of 0.52%. In fiscal Q4 2023, McKesson Corporation (NYSE:MCK) generated roughly $69 billion in revenues, which saw a 4.3% growth from the same period last year. Its cash position in FY23 came strong with an operating cash flow of $5.2 billion and a free cash flow of $4.6 billion. It also returned $292 million to shareholders in dividends. Warren Buffett started investing in McKesson Corporation (NYSE:MCK) during the first quarter of 2022 and his current stake in the company amounted to over $815.3 million. According to Insider Monkey's database of Q1 2023, 60 hedge funds owned stakes in McKesson Corporation (NYSE:MCK), up from 54 in the previous quarter. The total value of these stakes is nearly $4 billion. ClearBridge Investments mentioned McKesson Corporation (NYSE:MCK) in its Q1 2023 investor letter. Here is what the firm has to say:
“We also initiated a new position in McKesson Corporation (NYSE:MCK), the leading distributor of pharmaceuticals to retail drug stores, physicians’ offices and hospitals in the U.S. McKesson also has the largest specialty drug and oncology business in the U.S., which is the fastest-growing, highest-margin segment of drug distribution. A stable, cash-flow generative business, the company competes in a stable oligopoly with two other major distributors and, in addition to drug distribution, it is a significant provider of technology and transaction processing to drug stores, commercialization services to drug manufacturers, and basic supplies to physician offices. We expect at least low double-digit earnings growth from a combination of operating earnings, accretive acquisitions and share repurchases.”
Number of Hedge Fund Holders: 61 The Coca-Cola Company (NYSE:KO) is one of the oldest holdings of Warren Buffett. The billionaire started investing in the beverage giant in 1988 and has increased his stake in the company over the years. The company has been growing its dividends consistently for the past 61 years and currently pays a quarterly dividend of $0.46 per share. The stock's dividend yield on July 18 came in at 3.01%. The Coca-Cola Company (NYSE:KO) reported revenue of $11 billion in the first quarter of 2023, up 4.8% from the same period last year. The company generated an operating cash flow of $160 million during the quarter. For FY23, it expects to generate approximately $9.5 billion in free cash flow. At the end of the March quarter of 2023, 61 hedge funds tracked by Insider Monkey reported having stakes in The Coca-Cola Company (NYSE:KO), worth collectively over $24.8 billion.
Number of Hedge Fund Holders: 64 Chevron Corporation (NYSE:CVX) is one of the world's largest multinational energy corporations. It operates in the oil and gas industry, involved in various aspects of exploration, production, refining, marketing, and distribution of petroleum products. The energy sector overall has fallen this year, with the S&P 500 Energy Sector declining by 7.45% year-to-date, however, investors are still loading up on energy stocks because of their strong dividend policies. In the first quarter of 2023, Chevron Corporation (NYSE:CVX) generated $7.2 billion in operating cash flow and its free cash flow amounted to $4.2 billion. The company also returned $6.6 billion to shareholders through dividends and share repurchases, which makes it one of the best dividend stocks on our list. Chevron Corporation (NYSE:CVX) currently offers a quarterly dividend of $1.51 per share and has a dividend yield of 3.89%, as of July 18. The company has been rewarding shareholders with growing dividends for the past 36 years. As per Insider Monkey's database of Q1 2023, 64 funds owned stakes in Chevron Corporation (NYSE:CVX) in Q1 2023, growing from 57 in the previous quarter. These stakes are collectively valued at $23.6 billion. The London Company mentioned Chevron Corporation (NYSE:CVX) in its Q1 2023 investor letter. Here is what the firm has to say:
“Initiated: Chevron Corporation (NYSE:CVX) – CVX is an integrated energy and chemical producer. Its upstream segment explores for, produces, processes and transfers energy products. Its downstream segment refines and markets these products in addition to industrial plastics and fuel and lubricant additives. Among the major oil companies, CVX is the most levered to oil and gas production; it has one of the most successful exploration programs and among the best production profiles. CVX also has less exposure to the downstream business, which provides an above-peer operating margin profile and supports CVX’s return on invested capital. CVX has one of the strongest balance sheets in the oil industry with net debt/EBITDA of just 0.1x. The combination of its low cost positioning and strong balance sheet gives us greater confidence in downside protection despite its ties to a volatile commodity. We’re attracted to management’s rational approach to capital allocation, with consideration for the full cycle. In terms of capital allocation, CVX just announced a $75B share repurchase plan, and it pays a healthy 3.5% dividend. We have owned CVX in the past and it is the only Energy exposure in the Large Cap portfolio.”
Number of Hedge Fund Holders: 75 The Procter & Gamble Company (NYSE:PG) is next on our list of the best dividend stocks. The company specializes in consumer goods and operates in various product categories. In fiscal Q3 2023, the company's revenue showed a 3.5% year-over-year growth at $20.07 billion. Its operating cash flow for the quarter came in at roughly $4 billion and its free cash flow productivity was 92%. On July 11, The Procter & Gamble Company (NYSE:PG) declared a quarterly dividend of $0.9407 per share, which was in line with its previous dividend. The company is one of the strongest dividend growers, having raised its payouts for 67 years in a row. During the most recent quarter, the company also paid $2.2 billion to shareholders in dividends. At the end of Q1 2023, 75 hedge funds in Insider Monkey's database were bullish on The Procter & Gamble Company (NYSE:PG), up from 74 in the previous quarter. The stakes owned by these funds have a consolidated value of $4.66 billion. Ray Dalio, Ken Griffin, and Brandon Haley were some of the company's leading stakeholders in Q1.
Number of Hedge Fund Holders: 77 American Express Company (NYSE:AXP) is an American financial services company that specializes in payment cards. The company currently pays a quarterly dividend of $0.60 per share, having raised its payout by 15% in March this year. It has been making regular dividend payments to shareholders for consecutive 30 years. AXP is one of the best dividend stocks that Buffett owns alongside Cola Company (NYSE:KO) and Chevron Corporation (NYSE:CVX). The number of hedge funds tracked by Insider Monkey owning stakes in American Express Company (NYSE:AXP) jumped to 77 in Q1 2023, from 71 in the previous quarter. The consolidated value of these stakes is over $27.3 billion. ClearBridge Investments mentioned American Express Company (NYSE:AXP) in its Q1 2023 investor letter. Here is what the firm has to say:
” Other financial holdings were among the top contributors, such as American Express Company (NYSE:AXP), whose business is less sensitive to changes in the yield curve than most financials, and Progressive, which has minimal interest rate mismatch exposure.”
