3 Dividend Aristocrats In Warren Buffett's Secret Portfolio You Can Buy Right Now

You won’t find every stock that Warren Buffett owns listed on Berkshire Hathaway‘s (BRK.A -0.22%) (BRK.B -0.28%) 13-F filings to the U.S. Securities and Exchange Commission. No, the legendary investor isn’t sweeping anything under the rug. However, he does have a “secret portfolio” of sorts.

In 1995, General Re acquired an investment firm called New England Asset Management (NEAM). Three years later, Buffett led Berkshire to acquire General Re. Since then, all of the stocks owned by it have also been owned by Berkshire — and, by extension, Buffett.

Quite a few dividend stocks are included among NEAM’s holdings. And several of them have impressive track records of 25 or more years of consecutive dividend increases. Here are three Dividend Aristocrats in Buffett’s “secret portfolio” that you can buy right now. 

1. AbbVie: On its way to the top 

Berkshire directly owned shares of AbbVie (ABBV 0.04%) as recently as the beginning of 2022. However, it completely exited the position in the first quarter of this year. But Buffett still has his toes in the water with the big drugmaker through NEAM’s small stake in AbbVie. He should be glad that’s the case.

AbbVie hasn’t skyrocketed in 2022. But its year-to-date gain of nearly 6% has handily trounced the S&P 500. AbbVie’s stock performance has also been much better than Berkshire Hathaway’s.

The company has increased its dividend for 50 consecutive years, including the period when it was part of Abbott Labs. Since separating from Abbott in 2013, AbbVie has grown its dividend by more than 250%. Its dividend currently yields a little under 4%.

Sales of AbbVie’s top-selling drug, Humira, will almost certainly decline beginning next year with the entrance of biosimilars in the U.S. market. However, the company expects to quickly return to growth in 2024. Market researcher EvaluatePharma even predicts that AbbVie will become the world’s No. 1 pharmaceutical company based on prescription drug sales by 2028. 

2. Air Products & Chemicals: Winning from an unstoppable trend

I don’t think Buffett has ever publicly expressed interest in buying shares of Air Products & Chemicals (APD -0.61%). But he already owns a position in the industrial gas supplier thanks to NEAM’s tiny stake of only 482 shares. 

Low exposure to Air Products has turned out to be a good thing so far this year. The stock is down more than 20%. This decline is primarily due to investors’ worries about the economy. Air Products’ business continues to hum along. The company even beat Wall Street earnings expectations in all of its quarterly updates in 2022. 

Income investors have a lot to like about Air Products. The company has increased its dividend for 40 consecutive years. Its dividend yield stands at nearly 2.7%.

Air Products’ future looks bright. Its business is set to win big over the long run from an unstoppable trend — decarbonization. The company already ranks as the global leader in producing gray hydrogen (which is derived from natural gas). Air Products aims to become the leader in blue hydrogen (made from hydrocarbons with carbon dioxide capture) and green hydrogen (produced from renewable sources) as well. 

3. Chevron: One of Buffett’s favorites these days

Buffett clearly likes Chevron (CVX -6.53%). Berkshire has significantly increased its stake in the oil and gas giant this year. And his actual position in Chevron is even larger than you might think. Buffett’s “secret portfolio” has also piled into the stock. NEAM loaded up on Chevron in the second quarter.

Buying more shares of Chevron was a brilliant move. The stock has soared 25% so far this year. At one point in early June, it was up more than 50% year to date.

Chevron’s total return looks even better factoring in its dividends. The company has increased its dividend for 35 consecutive years. Its dividend yields close to 3.7%.

Even if oil prices drop to $50 per barrel (a 44% decline from the current price), Chevron would still be able to maintain its dividend and buy back shares. The likelihood of that happening doesn’t seem great anytime soon. Buffett will probably continue to like this Dividend Aristocrat for years to come.

Keith Speights has positions in AbbVie, Air Products & Chemicals, and Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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