Warren Buffett loves dividends. His beloved Berkshire Hathaway (BRK.A -2.20%) (BRK.B -2.03%) owns quite a few dividend stocks. Three of them have track records of at least 25 years of dividend increases.
But you might be surprised about how many members of dividend royalty in which the legendary investor really holds positions. Buffett's "secret portfolio" owns 31 Dividend Aristocrats.
Image source: The Motley Fool.
Like Baskin-Robbins
Just what is Buffett's "secret portfolio"? In 1995, investment firm New England Asset Management (NEAM) was acquired by General Reinsurance Corporation (Gen Re). Three years later, Berkshire bought Gen Re. NEAM doesn't hide its equity holdings; it reports them on a regular basis to the U.S. Securities and Exchange Commission (SEC). However, these stocks are often overlooked by Buffett's followers even though they are owned by Berkshire Hathaway.
When it comes to Dividend Aristocrats, these "secret" Buffett stocks are like Baskin-Robbins ice cream: They come in 31 flavors. Below are all 31 of the Dividend Aristocrats in NEAM's portfolio:
| Company |
Sector |
Consecutive Years of Dividend Growth |
|---|---|---|
| 3M | Industrials | 64 |
| Abbott Laboratories | Healthcare | 50 |
| AbbVie | Healthcare | 50 |
| Air Products & Chemicals | Materials | 40 |
| Automatic Data Processing | Information Technology | 47 |
| Becton, Dickinson | Healthcare | 50 |
| Chevron (CVX 1.89%) | Energy | 35 |
| Church & Dwight | Consumer Staples | 26 |
| Coca-Cola | Consumer Staples | 60 |
| Emerson Electric | Industrials | 65 |
| ExxonMobil | Energy | 39 |
| General Dynamics | Industrials | 25 |
| Illinois Tool Works | Industrials | 58 |
| International Business Machines | Information Technology | 28 |
| Johnson & Johnson | Healthcare | 60 |
| Kimberly-Clark | Consumer Staples | 50 |
| Linde | Materials | 29 |
| Lowe's | Consumer Discretionary | 48 |
| McCormick | Consumer Staples | 36 |
| McDonald's | Consumer Discretionary | 45 |
| Medtronic | Healthcare | 45 |
| NextEra Energy | Utilities | 28 |
| PepsiCo | Consumer Staples | 50 |
| PPG Industries | Materials | 50 |
| Procter & Gamble | Consumer Staples | 66 |
| Realty Income | Real Estate | 28 |
| S&P Global | Financials | 49 |
| Sysco | Consumer Staples | 53 |
| Target | Consumer Discretionary | 50 |
| VF Corp. | Consumer Discretionary | 48 |
| Walmart | Consumer Staples | 49 |
Data sources: New England Asset Management 13-F, S&P Dow Jones Indices, and company filings.
Several of the stocks on the list belong to an even more exclusive club than the Dividend Aristocrats -- the Dividend Kings. These stocks have increased their dividends for at least 50 consecutive years.
Biggest bets
Buffett's "secret portfolio" holds relatively small positions in most of these 31 Dividend Aristocrats. Chevron, though, stands out as a notable exception. As of the end of the second quarter of 2022, NEAM owned more than 2.15 million shares of the oil and gas giant.
Chevron also ranks as one of Berkshire's biggest bets. It's now the third-largest position in Berkshire's portfolio and has performed well so far this year.
NEAM doesn't have huge stakes in any of the other Dividend Aristocrats. The next two after Chevron are AbbVie and Procter & Gamble. At the end of Q2, NEAM owned 75,345 and 71,551 shares of these two stocks, respectively.
Best of the bunch
It isn't easy to pick the best of these Dividend Aristocrats. I think that Chevron is one of the stocks directly owned by Berkshire Hathaway that is also in NEAM's portfolio that's most likely to soar in the fourth quarter. My reasoning is that oil prices will move higher and provide a catalyst for the top energy stocks.
Over the longer term, I especially like the stocks on the list that could benefit from unstoppable trends. For example, an aging population should drive increased demand for products developed by AbbVie and Johnson & Johnson. The shift to clean energy should work to Air Products' advantage as it produces blue and green hydrogen.
Many of these stocks will probably be big winners over the next decade and beyond, though. The power of growing dividends to boost total returns is no secret at all.
