Warren Buffett loves consistency. And he additionally likes dividends — though his Berkshire Hathaway does not pay a dividend. While you put these two attributes collectively, it is a match made in heaven for the legendary investor.

Dividend Aristocrats present each consistency and dividends. Solely S&P 500 members with not less than 25 consecutive years of dividend will increase qualify for the elite group. Listed here are the three Dividend Aristocrats that Buffett likes essentially the most.

1. Coca-Cola

For a lot of his life, Buffett drank Pepsi. However he later switched to Coca-Cola (KO 0.52%) mushy drinks. Extra importantly, he led Berkshire to provoke a significant place in Coca-Cola inventory in 1988. It stays one of many high shares in Berkshire’s portfolio, rating behind solely Apple and Financial institution of America. 

Coca-Cola has elevated its dividend for 60 consecutive years. This observe report makes the inventory not solely a Dividend Aristocrat however a Dividend King as properly.

Berkshire will obtain greater than $700 million in dividends from Coca-Cola this yr primarily based on the variety of shares it at present owns. This large payout might be a adequate purpose for Buffett to hold on to these shares all by itself.

Nonetheless, he additionally likes Coca-Cola’s underlying enterprise and its administration workforce. Positive, soda consumption is declining. However Coca-Cola has acquired and developed different drinks, together with bottled water, espresso, juices, sports activities drinks, and teas. It has additionally achieved success with the launches of sugar-free mushy drinks corresponding to Coke Zero. 

2. Chevron

Buffett simply can not seem to get sufficient of Chevron (CVX 1.75%). Berkshire purchased 9 shares within the second quarter of 2022; Chevron was considered one of them. The oil and gasoline large now ranks because the fifth-largest holding in Berkshire’s portfolio.

Chevron has elevated its dividend for 35 consecutive years. Its dividend yield of over 3.6% is among the many juiciest of all of the shares owned by Berkshire. The conglomerate stands to obtain greater than $900 million in dividends from Chevron this yr. 

This vitality inventory has additionally been considered one of Buffett’s largest winners in 2022. Chevron’s share value has soared greater than 30%. Rising gas costs served as a key catalyst for the inventory. Chevron CEO Michael Wirth thinks that costs may rebound after the latest pullback.

Even when gas costs do not soar once more, Buffett will doubtless maintain on to this Dividend Aristocrat. Chevron has positioned itself properly to stay worthwhile even when oil and gasoline costs fall. The inventory can be attractively valued regardless of its large beneficial properties, with shares buying and selling at lower than 9.5 instances anticipated earnings.

3. Johnson & Johnson

Johnson & Johnson (JNJ -0.48%) is form of a sleeper in Berkshire’s portfolio. Buffett had a a lot bigger place within the healthcare large years in the past however offered a lot of the stake. Nonetheless, Berkshire’s comparatively small place in J&J continues to be sufficient to make it the portfolio’s No. Three Dividend Aristocrat. 

Like Coca-Cola, Johnson & Johnson is each a Dividend Aristocrat and a Dividend King. The corporate has elevated its dividend for 60 consecutive years. J&J has lengthy been a favourite for dividend buyers due to this consistency and its engaging dividend yield.

The healthcare inventory has lagged behind the S&P 500 lately. J&J’s dividend, although, helped shut the hole for whole returns fairly a bit. 

It is doubtless that Johnson & Johnson could possibly be a much bigger winner for Buffett going ahead. The corporate plans to spin off its shopper well being unit in 2023. That can depart J&J with the faster-growing pharmaceutical and medtech segments.