Warren Buffett is arguably the best investor in the world. His main holding, Berkshire Hathaway (BRK.B) has delivered market beating returns during his leadership. Buffett’s strategy is characterized by purchasing stocks which have a long-term durable competitive advantage in a stable industry. Buffett then holds on to these companies and reinvests distributions either back into the business or by purchasing new businesses. In a previous article I mentioned that Berkshire’s portfolio has likely generated over $1.30 billion in dividends in 2009. Some of its holdings included seven dividend aristocrats.
Stocks which are included in the dividend aristocrat’s index represent companies which have raised dividends for over 25 years in a row. The companies included in the index represent some of the world’s most recognizable brands such as Coca Cola (KO), McDonald’s (MCD) or Procter & Gamble (PG). They have strong durable advantages, which have allowed them to increase profits and share the wealth with shareholders by consistently raising distributions, through several economic crises, oil shocks and asset bubbles. In addition to that these wide-moat companies derive substantial portions of their revenues globally, which makes them somewhat immune to local economic downturns.
I believe that by combining Buffett’s strategy of purchasing the companies with strong competitive advantages with my dividend growth strategy would produce exceptional results for enterprising dividend investors. The dividend stocks in Berkshire’s portfolio include:
Becton, Dickinson and Company (BDX), a medical technology company, which develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide. The company has increased its quarterly dividend in each of the past thirty-seven years. (analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The company has increased distributions for 47 consecutive years. I would be a buyer of KO below $54.66. Check my analysis of the stock.
Exxon Mobil Corporation (XOM) engages in the exploration, production, transportation, and sale of crude oil and natural gas. The company is a component of the S&P 500, Dow Jones Industrials and the Dividend Aristocrats indexes. Exxon Mobil has been consistently increasing its dividends for 27 consecutive years. I would only be a buyer of XOM on dips below $60. Check my analysis of the stock.
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company has boosted distributions to shareholders for 47 years in a row. I would be a buyer of JNJ below $65.33. Check my analysis of the stock.
Lowe’s Companies (LOW) is one of the original components of the Dividend Aristocrats . The home improvement retailer which operates the United States and Canada has increased its dividends for 47 consecutive years.
The Procter & Gamble Company (PG) engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. The company has rewarded stockholders with dividend increases for 53 consecutive years. I would be a buyer of PG below $58.67. Check my analysis of the stock.
Wal-Mart Stores, Inc. (WMT) operates retail stores in various formats worldwide. The world’s largest retailer has a 35 year record of annual dividend raises. I would be a buyer of WMT on dips. Check my analysis of the stock.
Full Disclosure: Long KO, JNJ, PG and WMT
- Buffett the dividend investor
- Warren Buffett – The Ultimate Dividend Investor
- Buffett Partnership Letters
- Myths about Warren Buffett
This is a guest post by Mike, aka The Dividend Guy. He authors The Dividend Guy Blog since 2010 and manages portfolios at Dividend Stocks Ro...
Dividend growth stocks are the gift that keeps on giving . I like the fact that most of the work in selecting good dividend growth stocks is...
Last week I shared with you the list of 2016 Dividend Aristocrats and its performance over the past decade . In addition, I isolated twenty...
I pick my own dividend paying stocks in my taxable accounts, and wouldn’t have it any other way. I know some of you have mentioned that they...
Mark Seed is passionate about personal finance and investing and is the blogger behind My Own Advisor . Mark is currently investing in divi...
I am a fairly frugal person . An example of that is the fact that I drive a 15 year old car. I would likely keep driving this car until all ...
I have shared with you early in the year, that I am essentially living off dividends and side income in 2016. I am saving my other income i...
This is a guest post from Keith Park, who writes about dividend investing on DivHut . Keith has been a dividend growth investor since 2007 f...
My retirement strategy is focused on building a dividend portfolio of high quality blue chips, which are reliable dividend payers. For my di...
This is a guest contribution from Liquid at Freedom 35 Blog . Liquid is an avid investor in the North American financial markets and blogs a...