Investing

5 Blue Chip Dividend Stocks Make Up a Stunning 74% of Warren Buffett's Portfolio

Lee Jackson

Published: November 4, 2023 10:00 am

If any investor has stood the test of time, it’s Warren Buffett, and with good reason. For years the “Oracle of Omaha” has had a rock star-like presence in the investing world, and his annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors. Known for his long buy-and-hold strategies, and his massive portfolio of public and private holdings, he remains one of the preeminent investors in the entire world.

One of the reasons for Berkshire Hathaway’s stunning success over the years is that Warren Buffett and his right-hand man Charlie Munger have always tried to stay with stock ideas they understand, and that has proven to be a winning hand. In addition, many of the companies in their portfolio pay solid and reliable dividends.

Long-time investors and Buffett mavens are familiar with his quote that “His favorite holding for an S&P 500 stock is forever”, so it’s not surprising to report that for all of the success and stature Berkshire Hathaway has in the investment world, 5 top companies make up well over 70% of the fund’s total holdings. While much more concentrated than most portfolio managers would ever consider, the strategy has worked for Berkshire Hathaway investors for years, and likely will in the future.

American Express

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This stock has backed up recently and is offering Shareholders a 1.41% dividend. American Express Company (NYSE: AXP) provides charge and credit payment card products, and travel-related services worldwide.

The company operates through three segments:

• Global Consumer Services Group
• Global Commercial Service
• Global Merchant and Network Services

The company’s products and services also comprise merchant acquisition and processing, servicing and settlement, point-of-sale marketing, information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs. It sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams, and direct response advertising.

 Apple 

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The legacy technology makes up 47% of the Berkshire Hataway portfolio and pays a 0.50% dividend. Apple Inc. (NASDAQ: AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. 

The company offers the iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.

Apple also provides AppleCare support and cloud services; and operates various platforms, including the App Store that allow customers to discover and download applications and digital content, such as books, music, video, games, and podcasts.

In addition, the company offers various services, such as Apple Arcade, a game subscription service; Apple Fitness+, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News+, a subscription news and magazine service; Apple TV+, which offers exclusive original content; Apple Card, a co-branded credit card; and Apple Pay, a cashless payment service, as well as licenses its intellectual property.

Apple serves consumers, small and mid-sized businesses; and the education, enterprise, and government markets. It distributes third-party applications for its products through the App Store. The company also sells its products through its retail and online stores, direct sales force; and third-party cellular network carriers, wholesalers, retailers, and resellers.

Bank of America

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The company posted solid third-quarter results and shareholders are paid a solid 3.64% dividend. Bank of America Corporation (NYSE: BAC) is a ubiquitous presence in the United States providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations, and governments in the United States and internationally. Operating 5,100 banking centers, 16,300 ATMs, call centers, online and mobile banking platforms.

Bank of America has expanded into several new US markets, with scale across the country positioning them ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to substantially increase investment over the next few years without notably jeopardizing returns, driving further market share gains.

Chevron

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This integrated giant is a safer way for investors looking to get positioned in the energy sector and offers a big 4.14% dividend. Chevron Corporation (NYSE: CVX) through its subsidiaries, engages in integrated energy and chemicals operations worldwide. The company operates in two segments, Upstream and Downstream.

The Upstream segment is involved in the exploration, development, production, and transportation of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as operates a gas-to-liquids plant.

The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products, and lubricants; manufacturing and marketing renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities; insurance operations; real estate activities; and technology businesses.

Chevron recently announced a massive $53 billion purchase of Hess Corporation (NYSE: HES) for the second huge oil acquisition deal to be announced this fall. This comes after Exxon Mobil Corporation (NYSE: XOM) announced a $59 billion merger with Pioneer Natural Resources Company (NYSE: PXD)

The Coca-Cola Company

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This company remains a top Warren Buffet holding as he owns a massive 400 million shares that pay a rich 3.26% dividend. The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, offering consumers more than 500 sparkling and still brands. Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the Company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia, and Del Valle. Globally, they are the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy the company’s beverages at a rate of more than 1.9 billion servings a day. It’s also important to remember that the company also owns 16.7% of Monster Beverage (NASDAQ: MNST) which continues to deliver big numbers.

Given Warren Buffet’s proclivity for only owning the stock of companies that he understands inside and out, all of these make sense now for growth and income investors worried about the potential for a steep market decline. While they could sell off in a large correction, they will hold on far better than most, and many of these top companies (except for Apple) are offering the best entry points and dividends in some time.