Investing

5 Blue Chip Dividend Stocks Incredibly Still Make Up 75% of Warren Buffett's Portfolio

Lee Jackson

Published: November 21, 2022 7:01 am

Last Updated: November 21, 2022 9:02 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 proved to be a winning strategy. In addition, many of the companies in their portfolio pay solid and reliable dividends.

Longtime 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 really surprising to report that for all of the success and stature Berkshire Hathaway has in the investment world, that five top companies make up almost 75% 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 continue in the future.

All five of these top companies are rated Buy, and all pay reliable dividends. With that noted, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

American Express

This stock has backed up recently and is offering the best entry point since late last year, despite posting solid second-quarter results. 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 services; and global merchant and network services. Its products and services include payment and financing products; network services; accounts payable expense-management products and services; and travel and lifestyle 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.

Shareholders are currently paid a 1.36% dividend. Wells Fargo has an overweight rating on the financial giant and a $170 price target. The Wall Street consensus target for the stock is posted at $167.75. The shares closed trading on Friday at $152.50.

Apple

It’s almost hard to comprehend that the legacy technology makes up a stunning 40% of the Berkshire Hathaway portfolio. Apple Inc. (NASDAQ: AAPL) designs, manufactures, and markets consumer electronics and computers. The company has developed its own proprietary iOS and Mac OS X operating systems and related software platform/ecosystem.

Revenues are principally derived from the iPhone line of smartphones, hardware sales of the Macintosh family of notebook and desktop computers, iPad tablets, and iPod portable digital music players, and the Apple Watch.

The company also realizes revenue from software, peripherals, digital media, and services. The technology giant has consistently churned out new products that the public loves and an inexpensive iPhone is one of its newest offerings

Apple shareholders are paid a 0.61% dividend. JPMorgan has a Buy rating and a $200 price target The consensus price target across Wall Street is $178.15. The stock closed trading on Friday at $151.29.

Bank of America

The company posted solid third-quarter results and interest0rate increases are welcomed by banks. 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. Bank of America operates 5,100 banking centers, 16,300 ATMs, call centers, online and mobile banking platforms.

[recirclink id=1072347]

The money-center bank has expanded into a number of new US markets, with scale across the country, positioning Bank of America 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.

Shareholders are paid a 2.37% dividend. Barclays has an overweight rating and a $51 target price. The Wall Street consensus price target is posted at $41.31. The shares were last seen Friday trading at $37.19. Warren Buffett owns a stunning 1.1 billion shares of the bank.

Chevron

This integrated energy giant is a safer way for investors looking to get positioned in the energy sector and has backed up nicely. 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 operating 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 of 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 posted massive third-quarter results and remains one of the best ways to play energy safely.

The company sports a sizable 3.10% dividend, and has a solid place in the sector when it comes to natural gas, and liquefied natural gas. Raymond James has an outperform rating and a huge $215 target price. The consensus target is posted at $190.33. The shares closed Friday at $182.99.

The Coca-Cola Company

This company remains a top Warren Buffet holding as he owns a massive 400 million shares> It not only offers safety, but has an incredibly strong worldwide brand with 40% overseas sales. The Coca-Cola Company (NYSE: KO) is the world’s largest beverage business, 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, Coca-Cola is 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 important to remember that the company also owns 16.7% of Monster Beverage (NASDAQ: MNST), which continues to deliver big numbers.

Investors are paid a very dependable 2.88% dividend. UBSl has a buy rating and a $68 target price. The Wall Street consensus price objective for the stock is set at $66.61. The final trade on Friday came in at $61.14.

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 in far better than most.