Investing

The Top 8 Dividend Stocks Owned by Warren Buffett and Berkshire Hathaway

Coca-Cola
> Dividend Yield: 3.19%
> Buffett Stake: 400.0 million shares
> Market Value: $17 billion

Coca-Cola Co. (NYSE: KO) has been the same size stake for years at Berkshire Hathaway. Needless to say, Buffett has clipped years and years worth of dividends here, and his dividend-adjusted cost basis has to be getting ever closer to zero, since the first part of the position dates back over 25 years now. The attraction here is that Buffett sees sodas as having secular demand, even if they have been weak of late. The Green Mountain and Monster Beverage stakes by Coca-Cola are taking the company to the next stage. Coca-Cola has raised its dividend for more than 50 consecutive years.

Coca-Cola closed recently at $41.39 versus a 52-week range of $37.88 to $45.00. It has a consensus analyst price target of $45.38 and a market cap of $180 billion. Shares are up 10.6% over the last year.

General Motors
> Dividend Yield: 3.20%
> Buffett Stake: 41.0 million shares
> Market Value: $2 billion

General Motors Co. (NYSE: GM) has a high yield that is going even higher after its most recent dividend announcement, and it has a large share buyback that Buffett likes to see. This was also a stake that was raised by a million shares in this past quarter. What draws Buffett and his portfolio managers to GM is obvious: it went on sale after the recalls and it is one of the top car brands around the globe. GM also telegraphed that it is likely to maintain its investment grade balance sheet rating from S&P with the capital returns.

GM recently closed at $37.66, and it has a 52-week range of $28.82 to $38.18. The consensus price target is $42.00. Its market cap is $60 billion. Shares are up 4.3% over the past year.

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Suncor Energy
> Dividend Yield: 3.12%
> Buffett Stake: 22.4 million shares
> Market Value: $638 million

Suncor Energy Inc. (NYSE: SU) has been a fairly large bet from Buffett to get exposure to the Canadian oil sands. Maybe this is a hedge against the BNSF rail play, in case that Keystone pipeline project ever gets approved. What is amazing is that this was recently put as a larger stake, despite the drop in oil and concerns about Canada’s economy.

Suncor has been far from immune to the drop in oil prices, and its high yield may be due largely to the drop in shares. With the payout now above 2015 earnings expectations, we wonder if Buffett views this as a yield play at all — he might be concerned about the dividend. Another consideration is that the dividend paid in the United States fluctuates due to the currency exchange, even though it has been static for three quarters at C$0.28 up in Canada.

Suncor closed most recently at $28.56, and it has a 52-week range of $26.56 to $43.49. The consensus price target is $43.02, and the market cap is $41 billion. Shares are down 11.9% over the past year.

Procter & Gamble
> Dividend Yield: 3.10%
> Buffett Stake: 52.8 million shares
> Market Value: $4 billion

Procter & Gamble Co. (NYSE: PG) is about to be an interesting look for Buffett due to the Berkshire Hathaway acquisition of Duracell. Buffett’s share count is getting closer to half of what it used to be as well, and it is in many ways a holdover from the days when Buffett owned Gillette and it was bought by P&G.

The draw here is obvious in that P&G is the largest consumer products giant in the world, even if it now is trying to jettison many brands. P&G has paid dividends for 124 years, and 2014 was the 58th consecutive dividend hike. P&G may seem expensive at 20-times expected earnings, but Buffett’s adjusted cost basis is drastically lower. The Duracell deal is going to create a swap of P&G shares from Berkshire Hathaway, but that may not drive investors away since Buffett is sticking with a big 44.7 billion bet inside a P&G unit (Duracell).

P&G closed recently at $83.09, in a 52-week range of $77.29 to $93.89. The consumer products giant has a consensus price target of $93.21. The market cap is $224 billion. P&G shares are up 9.3% over the past year.

International Business Machines
> Dividend Yield: 2.75%
> Buffett Stake: 76.9 million shares
> Market Value: $12 billion

International Business Machines Corp. (NYSE: IBM) is a battered tech stock that just cannot seem to get on track. Still, Buffett made a big bet here and he keeps adding to the position. His view is that the stock buybacks are helping out and that the dividend will keep rising. Buffett’s draw was a dominant position for a large IT services outfit plus a large amount of hardware.

We still think Buffett may regret this pick, but Buffett has said openly that he would be unable to buy shares of Microsoft due to the Gates friendship and overlapping of philanthropic efforts — so he likely wouldn’t buy Apple either. IBM investors have seen a higher dividend for 19 straight years, and those same investors should expect a higher dividend soon as well.

IBM recently closed at $160.77, in a 52-week range of $149.52 to $199.21. It has a consensus price target of $158.45 and a market cap of $159 billion. Shares are down 12.1% over the past year.

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