Investing

Warren Buffett Is Worried: These Are His 5 Safest Blue-Chip Dividend Stocks

Lee Jackson

Published: September 10, 2024 8:16 am

24/7 Wall St. Insights

• Warren Buffett has sold over half of his Apple stock.
• The stock market is very overbought, and caution is warranted now.
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock,” plus get our two best dividend stocks to own today: 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. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors.

Known for his long buy-and-hold strategies and massive portfolio of public and private holdings, he remains one of the world’s preeminent investors. With interest rates poised to move lower, adding Buffett dividend-paying stocks that will rally as bond yields drop makes sense.

It’s been widely reported that Buffett has amassed a massive $270 billion pile of cash, likely sitting in short-term Treasury bills and paying up to 5%. His massive sale of Apple Inc. (NASDAQ: AAPL) and Bank of America Corp. (NYSE: BAC) have been the major contributors to the gigantic cash holdings. While he rarely sells long-term winners, as he has massive gains in both stocks, many feel there may be more to the equation.

As Buffett sits on the most cash Berkshire Hathaway has ever had, investors wonder what he is worried about. Are the political winds signaling a change in Washington, D.C.? Is the extraordinarily overbought and bloated stock market a concern? Are geopolitical worries continuing as wars rage in the Middle East and Ukraine? Whatever the case, we decided to scan the portfolio for the safest stocks that pay dependable dividends. Five top companies stand out, all rated Buy at top Wall Street firms.

Why do we cover Warren Buffett stocks?

There are few investors with the results and the reputation Buffett has garnered over the last 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.

Chevron

This integrated giant is a safer option for investors looking to position themselves in the energy sector and pays a rich 4.44% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. It operates in two segments.

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 products
• 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 last 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.

Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’s Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal will ultimately be completed, and Chevron will emerge even more powerful in the energy sector.

This is one of just two energy holdings in Berkshire Hathaway, which holds over 118 million shares of the integrated giant.

Citigroup

This is a top money center bank, and Warren Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.49% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.

Citigroup offers:

• Consumer banking and credit
• Corporate and investment banking
• Securities brokerage
• Transaction services
• Wealth management services

Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).

Trading at a reasonable 9.2 times estimated 2025 earnings, this company looks very reasonable in what remains a volatile stock market and in a sector that has lagged some in 2024 but looks to be gaining ground.

Coca-Cola

This company also remains a top Warren Buffet holding as he owns a massive 400 million shares. Shareholders are paid a solid 2.71% dividend. 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, the company is the number one provider of sparkling beverages, ready-to-drink coffees, and juices 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 16.7% of Monster Beverage Corp. (NASDAQ: MNST), which continues to deliver big numbers.

Kraft Heinz

Even in bad times, everybody has to eat, and this company always stands to benefit while paying a tremendous 4.48% dividend. Kraft Heinz Co. (NYSE: KHC) was formed via the merger of H.J. Heinz Company and Kraft Foods Group.

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. 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
• Target

Kroger

This grocery chain giant is always a solid and conservative idea that pays a 2.43% 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
• 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 sell groceries, health and beauty care products, meat, dairy, baked goods, and fresh produce.

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 difficult, and the two companies are in federal court to defend the merger.

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