Investing

5 Safe Warren Buffett Dividend Stocks to Buy for a Potentially Scary Summer

Lee Jackson

Published: June 11, 2024 7:18 am

24/7 Insights

• Berkshire Hathaway currently has $189 billion in cash.
• Warren Buffett recently added a massive $6.7 billion position in insurance giant Chubb.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

If any investor has stood the test of time, it’s Warren Buffett, and with good reason. The “Oracle of Omaha” has had a rock-star-like presence in the investing world for years. His annual Berkshire Hathaway shareholders meeting, which draws thousands of loyal fans who are investors, is a testament to the sense of community and shared interest he has fostered. 

There are few investors with the results and the reputation Mr. Buffett has garnered over the past 50 years, and while investing has changed over the previous half-century, buying good companies with products and services that are known worldwide while paying dividends will always stay in style. 

With the stock market horribly overbought and likely poised for a severe correction, we decided to screen the Berkshire Hathaway portfolio, looking for companies that can ride out what could be a brutal 20% or larger sell-off. Five top holdings make sense now, and all pay dependable and big dividends. All five are rated Buy at top Wall Street firms.

Why do we cover Warren Buffett stocks?

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With a 15-year track record of covering Mr. Buffett and Berkshire Hathaway at 24/7 Wall St., we constantly screen the portfolio, looking for stocks that fit the current investment climate. After a massive run over the last year and a half, some of the safer ideas make total sense now. 

Bank of America

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Bank of America is an American multinational investment bank and financial services holding company.

The company posted strong first-quarter results and pays a solid 2.48% dividend. Bank of America Corp. (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, and online and mobile banking platforms.

Bank of America has expanded into several new US markets, and its global scale ideally positions it 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.

Warren Buffett owns 1,032 852,006 bank shares, 13% of the float, and 9.5% of Berkshire Hathaway’s portfolio.

Chevron

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Chevron is an American multinational energy corporation predominantly specializing in oil and gas.

This integrated giant is a safer way for investors looking to get positioned in the energy sector, and it pays a rich 4.07% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

The company operates in two segments:

• Upstream
• Downstream

The Upstream segment is involved in the following:

• 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
• Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum product
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

Chevron announced in the fall that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Berkshire Hathaway owns 6.7% of Chevron’s outstanding stock with 122.980,207 shares, and the energy giant makes up 5.2% of the portfolio. Each year the stock generates $776,734,888 in dividend income. 

Coca-Cola

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This company remains a top Warren Buffet holding as he owns a massive 400 million shares, 9.3% of the float and 6.6% of the portfolio. Coca-Cola Co. (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
• Del Valle

Globally, they are the number one provider of sparkling beverages, ready-to-drink coffees, and juice drinks.

Through the world’s most extensive 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 owns almost 20% % of Monster Beverage Corp. (NASDAQ: MNST), which continues to deliver big numbers.

Investors are paid a very dependable 3.06% dividend

Kraft Heinz

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Even in bad times, everybody has to eat, and this company always stands to benefit while paying a tremendous 4.47% dividend. The Kraft Heinz Company (NYSE: KHC) was formed via the merger of H.J. Heinz Company and Kraft Foods Group. Berkshire Hathaway owns 325,634,818 shares which is 3% of the portfolio and a massive 26.8% of the float. 

The company is a leading global food company with estimated annual revenues of $25 billion from well-known brands such as Kraft, Heinz, Oscar Meyer, and Maxwell House.

Kraft Heinz is North America’s third-largest food and beverage manufacturer, and it derives 76% of its revenues from that market and 24% from International.

The company’s additional brands include:

• ABC
• Capri Sun
• Classico
• Jell-O
• Kool-Aid
• Lunchables
• Ore-Ida
• Oscar Mayer
• Philadelphia
• Planters
• Plasmon
• Quero
• Weight Watchers
• Smart Ones 
• Velveeta

5 Best Dividend Stocks to Buy in June

Kroger

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Kroger is an American retail company that operates supermarkets and multi-department stores throughout the United States.

This grocery chain giant is always a solid and conservative idea that pays a 2.03% dividend. Kroger Co. (NYSE: KR) is a retailer in the United States. It operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses.

Its combination of food and drug stores offers:

• Natural food and organic sections
• Pharmacies
• General merchandise
• Pet centers
• Fresh seafood and organic produce

Multi-department stores offer apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.

The company’s marketplace stores offer:

• Full-service grocery, pharmacy, health and beauty care
• Perishable goods, as well as general merchandise, including apparel, home goods, and toys
• Price impact warehouse stores provide grocery, health, and beauty care items, meat, dairy, baked goods, and fresh produce items.

The company also manufactures and processes food products in its supermarkets and online; it sells fuel through 1,613 fuel centers.

Kroger owns 22 companies, including Harris Teeter, Smith’s Food and Drug, Ralphs, King Soopers/City Market, and Roundy’s Supermarkets.

Kroger is in the process of buying Albertsons Companies Inc. (NYSE: ACI) and will sell more than 400 stores and other assets for about $1.9 billion. This is to clear a path for a merger with antitrust regulators reviewing a deal that would merge two of the nation’s largest grocery chains. Negotiations with the Federal Trade Commission have proven to be difficult, so this process could take a while to play out and could be turned down. 

Berkshire Hathaway holds 50,000,000 shares which is almost 7% of the float.

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