If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally 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 world.
One reason for Berkshire Hathaway’s stunning success over the years is that Buffett and his right-hand man, Charlie Munger, have always tried to stay with stock ideas they understand. That has proven to be a winning hand. In addition, many of the companies in their portfolio pay solid and reliable dividends.
Often when total return investors, like Buffett, look for companies paying big dividends, they are drawn to the Dividend Kings. These are the 44 companies that have raised the dividends they pay to shareholders a stunning 50 consecutive years in a row or longer. Three of these dependable dividend giants are in Buffet’s portfolio. Not surprisingly, all three are rated Buy across Wall Street.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Coca-Cola
This remains a top Buffet holding, as he owns a massive 400 million shares, and not only offers safety but has an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO | KO Price Prediction) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.
Led by Coca-Cola, one of the world’s most valuable 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, it is the number one 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 Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola stock investors receive a 2.76% dividend. Truist Financial has a $75 target price, and the consensus target is $69.11. The final trade on Friday came in at $63.70 per share.
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Johnson & Johnson
With a diverse product base and a very popular and solid brand, this is among the most conservative big pharmaceutical plays. Johnson & Johnson (NYSE: JNJ) researches, develops, manufactures and sells various products in the health care field worldwide.
Its Consumer Health segment offers baby care products under the Johnson’s and Aveeno Baby brands; oral care products under the Listerine brand; skin health/beauty products under the Aveeno, Clean & Clear, Neutrogena and OGX brands; acetaminophen products under the Tylenol brand; cold, flu and allergy products under the Sudafed brand; allergy products under the Benadryl and Zyrtec brands; ibuprofen products under the Motrin IB brand; smoking cessation products under the Nicorette brand; and acid reflux products under the Pepcid brand.
This segment also provides women’s health products, such as sanitary pads and tampons under the Stayfree, Carefree, and o.b. brands; wound care products comprising adhesive bandages under the Band-Aid brand; and first aid products under the Neosporin brand.
Johnson & Johnson’s Pharmaceutical segment offers products in various therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, pulmonary hypertension and cardiovascular and metabolic diseases.
The Medical Devices segment provides electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopedics products in support of hips, knees, trauma, spine, sports and other; advanced and general surgery solutions that focus on breast aesthetics and ear, nose and throat procedures; and disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery under the Acuvue brand.
The dividend has a 2.73% yield. Citigroup’s price target for Johnson & Johnson stock is $201. The lower consensus target is just $187.84, and shares closed at $165.30 apiece on Friday.
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Procter & Gamble
The company offers a very solid dividend as well as a host of recognizable products. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products companies and one of the oldest in the Fortune 500. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn.
The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores and pharmacies. The company has been very innovative in its product development process and uses that to help ensure future growth and cash flow. This should provide investors years of steady growth and dividends.
Shareholders receive a 2.50% dividend. The $160 Wells Fargo price objective is higher than the $156.38 consensus target. Procter & Gamble stock closed at $146.67 on Friday.
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All three of these stocks have reasonable upside to the Wall Street targets, and they all come with dependable dividends, given their Dividend King status. With even moderate appreciation in the share prices of these top companies, investors should be looking at double-digit percentage total return potential. In a market that is very volatile and could be headed much lower, as we are already in a recession, these safe Dividend King and Warren Buffet Berkshire Hathaway stocks make a ton of sense now.
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