In this article, we discuss top 10 dividend stocks to buy according to Warren Buffett. You can skip our detailed analysis of Berkshire Hathaway’s performance and Buffett’s investment strategy, and go directly to read Warren Buffett’s Top 5 Dividend Stock Picks.
The ongoing market volatility has opened new investing avenues for the world’s greatest value investor Warren Buffett. His hedge fund, Berkshire Hathaway, loaded up on energy stocks earlier this year due to the sector’s low valuations and steady shareholder return. Where the stock market selloff was worrying for many investors, Buffett made the most of it by targeting his favorite sectors. According to a report by Wall Street Journal, Berkshire bought stocks worth over $66 billion during the first nine months of the year, spending over 13 times more as compared to the same period in 2021.
The interest rate hikes have also benefitted the Berkshire this year. In the third quarter, the company earned over $397 million in interest on its $197 billion cash pile, which is over three times from a year-ago period, as reported by Financial Times. The report also mentioned that the energy business within Berkshire’s utility division reported a 17% growth in revenues due to higher power costs.
During the third quarter of 2022, Berkshire bought $9 billion in stock overall, including over $4.1 billion worth of investment in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Other than this, Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) are other prominent tech stocks in the billionaire’s portfolio. The hedge fund’s 13F portfolio had a value of over $296 billion in Q3 2022, compared with $300 billion in the previous quarter.
Buffett has also focused on dividend stocks since the very start of his investment career. As of Q3, nearly 90% of the companies in his portfolio pay regular dividends to shareholders. Given this, we will discuss the top dividend stocks in Buffett’s portfolio.
Our Methodology:
We selected dividend stocks from Berkshire Hathaway’s 13F portfolio, as of the third quarter of 2022. The stocks are ranked according to their stake value in the portfolio.
Warren Buffett’s Top 10 Dividend Stock Picks
10. The Kroger Co. (NYSE:KR)
Berkshire Hathaway’s Stake Value: $2,199,260,000
Dividend Yield as of November 18: 2.13%
The Kroger Co. (NYSE:KR) is an Ohio-based retail company that operates supermarkets and multi-department stores across the country. The company has been a part of Berkshire’s portfolio since the fourth quarter of 2019 when the hedge fund opened its position with shares worth over $549 million. At the end of Q3 2022, the fund owned over 50 million KR shares, worth $2.2 billion. The company represented 0.74% of Warren Buffett’s portfolio.
In addition to Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), The Kroger Co. (NYSE:KR) is another important holding of Warren Buffett.
The Kroger Co. (NYSE:KR) is one of the best dividend stocks on our list as it has raised its payouts each year since 2006. The company pays a quarterly dividend of $0.26 per share and has a dividend yield of 2.13%, as of November 18.
In November, Evercore ISI upgraded The Kroger Co. (NYSE:KR) to Outperform and also raised its price target on the stock to $56. The firm sees the above industry demand due to higher inflation in the coming months.
As of the close of Q3 2022, 49 hedge funds tracked by Insider Monkey owned stakes in The Kroger Co. (NYSE:KR), the same as in the previous quarter. These stakes have a total value of over $4.12 billion.
9. Citigroup Inc. (NYSE:C)
Berkshire Hathaway’s Stake Value: $2,298,341,000
Dividend Yield as of November 18: 4.71%
Citigroup Inc. (NYSE:C) is an American multinational investment banking company that offers related services to its consumers. JPMorgan mentioned the company in its November investors’ note and stated that large-cap banks are seeing benefits in revenues from higher interest rates and credit quality. Given this, the firm raised its price target on the stock to $49.50 with a Neutral rating on the shares.
At the end of Q3 2022, Berkshire owned over 55 million shares in Citigroup Inc. (NYSE:C), valued at roughly $2.3 billion. The company represented 0.77% of Warren Buffett’s portfolio.
On October 20, Citigroup Inc. (NYSE:C) declared a quarterly dividend of $0.51 per share, in line with its previous dividend. The stock’s dividend on November 18 came in at 4.71%.
At the end of Q3 2022, 65 hedge funds in Insider Monkey’s database owned stakes in Citigroup Inc. (NYSE:C), growing from 82 in the previous quarter. These stakes have a total value of over $7.1 billion.
Diamond Hill Capital mentioned Citigroup Inc. (NYSE:C) in its Q1 2022 investor letter. Here is what the firm has to say:
“Shares of Citigroup declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
8. The Bank of New York Mellon Corporation (NYSE:BK)
Berkshire Hathaway’s Stake Value: $2,396,364,000
Dividend Yield as of November 18: 3.33%
The Bank of New York Mellon Corporation (NYSE:BK) is a New York-based investment banking services holding company that conducts businesses in all markets of the world. Berkshire has been investing in the company since the fourth quarter of 2010. During Q3 2022, the hedge fund reduced its position in the company by 15%, which takes its total BK stake to roughly $2.4 billion. The company represented 0.8% of Warren Buffett’s portfolio.
On October 17, The Bank of New York Mellon Corporation (NYSE:BK) declared a quarterly dividend of $0.37 per share, which fell in line with the company’s previous dividend. The company has paid regular dividends to shareholders for 21 years in a row. As of November 18, the stock has a dividend yield of 3.33%.
Citigroup raised its price target on The Bank of New York Mellon Corporation (NYSE:BK) to $50 in October with a Buy rating on the shares, highlighting the company’s strong capital returns and improving net interest income outlook for FY23.
The Bank of New York Mellon Corporation (NYSE:BK) experienced growth in hedge fund positions in Q3 2022, as 50 funds tracked by Insider Monkey owned stakes in the company, up from 38 in the previous quarter. These stakes are valued at $3.28 billion collectively, compared with $3.6 billion worth of stakes owned by hedge funds in the preceding quarter.
7. U.S. Bancorp (NYSE:USB)
Berkshire Hathaway’s Stake Value: $3,136,420,000
Dividend Yield as of November 18: 4.45%
U.S. Bancorp (NYSE:USB) is an American bank holding company. Elite funds remained bullish on the company in Q3 2022, with hedge fund positions increasing to 52, from 43 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of roughly $4.8 billion.
At the end of Q3 2022, Berkshire’s stake in U.S. Bancorp (NYSE:USB) amounted to over $3.1 billion, after the fund reduced its position in the company by 36%. The company constituted 1.05% of Warren Buffett’s portfolio.
In September, 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 growth, coming through as one of the top dividend stocks on our list. The stock’s dividend yield came in at 4.45%, as recorded on November 18.
In November, JPMorgan raised its price target on U.S. Bancorp (NYSE:USB) to $47 with an Overweight rating on the shares, presenting a positive outlook on large-cap banking stocks.
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: $5,997,470,000
Dividend Yield as of November 18: 0.95%
Moody’s Corporation (NYSE:MCO) is a New York-based credit and financial services company that provides services related to risk analysis and credit ratings. The company has been raising its dividends consistently for the past 12 years, which makes it one of the top dividend stocks on our list. It currently pays a quarterly dividend of $0.70 per share and has a dividend yield of 0.95%, as of November 18.
Berkshire Hathaway opened its position in Moody’s Corporation (NYSE:MCO) with $249 million in 2001. Over the years, the firm has increased its position in the company. At the end of Q3 2022, the hedge fund owned over 24.6 million MCO shares, worth roughly $6 billion. The company constituted 2.02% of Warren Buffett’s portfolio. It is another prominent holding of Buffett alongside Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN).
Following the company’s Q3 earnings, Atlantic Equities raised its price target on Moody’s Corporation (NYSE:MCO) to $292 in November with a Neutral rating on the shares.
The number of hedge funds tracked by Insider Monkey owning stakes in Moody’s Corporation (NYSE:MCO) grew to 63 in Q3 2022, from 48 in the preceding quarter. The collective value of these stakes is over $11 billion.
Click to continue reading and see Warren Buffett’s Top 5 Dividend Stock Picks.
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Disclosure. None. Warren Buffett’s Top 10 Dividend Stock Picks is originally published on Insider Monkey.