When it comes to seasoned investing, few names shine quite as brightly as Warren Buffett, the illustrious “Oracle of Omaha.” Buffett’s Berkshire Hathaway (BRK.B) portfolio, valued at a staggering $400 billion, is a testament to his eye for selecting stocks that weather the storm of time. His preference leans toward high-quality companies offering steady returns.

Three dividend delights prominently feature in Buffett’s holdings: The Coca-Cola Company (KO), The Kroger Co. (KR), and American Express Company (AXP). These stalwarts not only represent pivotal sectors of the economy but also embody Buffett’s affinity for robust fundamentals, consistent dividend disbursements, and a consumer-centric outlook.

While some of these stocks currently hover near Wall Street’s average price marks, astute investors would do well to monitor for potential downturns to established support levels. Timing, as in all good things, is critical in the investment sphere. Seizing the opportunity to acquire these Buffett-approved picks during downswings could prove a shrewd move, allowing the procurement of top-notch dividend stocks at more enticing valuations.

Let’s delve deeper to uncover the allure behind these three Warren Buffett-endorsed dividend investments.

#1. The Coca-Cola Company (KO): A Quenching Fountain of Dividend Strength

Coca-Cola (KO) reigns as a global beverage titan renowned for its iconic lineup including Coke, Sprite, and Fanta. With a presence spanning the globe, this multinational juggernaut boasts over 500 beverage brands in its repertoire.

The past year has seen Coca-Cola’s stock maintain a subdued trajectory, notching a modest 52-week gain of 5.4%. Presently, the stock has rallied by 6.8% year-to-date, trading a mere 2% shy of its zenith.

Boasting a market cap of $274.65 billion, Coca-Cola stands as a blue-chip prospect modestly priced at a forward P/E ratio of 22.59, in contrast to its trailing P/E ratio of 23.36.

The Dividend King declared a quarterly dividend of $0.485 on June 14, 2024. This culminates in an annualized dividend of $1.94, equating to a forward yield of approximately 3%.

In its Q1 2024 earnings disclosure, Coca-Cola showcased robust performance, manifested in a 1% uptick in unit case volume, a 3% surge in net revenues to $11.3 billion, and an 11% expansion in organic revenues. EPS witnessed a 3% boost to $0.74, with comparable EPS marking a 7% increase to $0.72. 

CEO James Quincey, in expressing optimism for the year’s commencement, lauded Coca-Cola’s delivery of “another quarter of volume, topline, and earnings growth amidst a dynamic backdrop.”

Moreover, Coca-Cola unveiled a five-year strategic collaboration with Microsoft (MSFT) to hasten cloud and transformative artificial intelligence (AI) endeavors. This partnership underscores Coca-Cola’s ongoing tech metamorphosis, underpinned by a $1.1 billion commitment to Microsoft’s Cloud and its transformative AI capabilities.

The analyst consensus on KO stock is overwhelmingly positive, with 20 analysts proffering recommendations. The prevailing sentiment is a resounding “strong buy,” with 14 urging a “strong buy,” 1 advising a “moderate buy,” and 5 proposing a “hold.” The mean price target sits at $66.83, hinting at a 6.1% possible upswing from current levels.

#2. The Kroger Co. (KR): Grocery Mogul with Blooming Dividend Prospects

Kroger (KR) commands a prominent stance in the American grocery landscape. Their broad footprint spans supermarkets, multi-department stores, and convenience marts nationwide. What sets them apart? A fusion of distinctive brands, an expansive retail network, and a burgeoning online presence geared towards providing customers with value without compromising quality.

KR shares have surged by 13.6% in the current year, amassing a 52-week return of 10.1%.

Presenting a market cap of $37.41 billion, KR stock remains attractively priced by valuation metrics, trading at 11.70 times forward earnings and 0.25 times sales.

Furthermore, the company has vested interest in its shareholders’ welfare, having recently hiked its quarterly dividend by 10%. With the augmented dividend offering of $0.32 per share, Kroger’s yield stands at 2.47% annually, supported by over 15 years of consecutive dividend growth.

Kroger’s Q1 2024 earnings synopsis, unveiled on June 20, delineated total sales reaching $45.3 billion, a marginal uptick from the prior year. EPS came in at $1.29, with adjusted EPS of $1.43 surpassing Street estimates. The company reiterated its full-year 2024 outlook, envisioning identical sales growth sans fuel spanning from 0.25% to 1.75%, and adjusted EPS ranging between $4.30 and $4.50.

As the grocery behemoth awaits a forthcoming judicial decision on its proposed Albertsons merger, Kroger is widening its healthcare portfolio. Initiating senior-oriented primary healthcare amenities across eight clinics in Atlanta through a collaboration with Better Health Group, Kroger is carving a niche in this sector. Further, Kroger’s foray into the burgeoning GLP-1 market signals its diversification and expansion strategy.

Market analysts have bestowed upon KR stock a consensus “moderate buy” rating. Out of the 17 analyst appraisals, 10 advocate a “strong buy,” 6 recommend a “hold,” and 1 suggests a “strong sell.” The mean price target for KR stands at $57.47, depicting a prospective 10.6% appreciation from ongoing valuations.