Warren Buffett likes dividend stocks. And he owns positions in more of them than you might think, because he has what you might call a "secret portfolio."
As the largest shareholder of Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%), Buffett has exposure to every stock that the giant conglomerate owns. Its equity holdings aren't limited to those that it discloses on 13-F filings to the U.S. Securities and Exchange Commission, though. Berkshire Hathaway also fully owns New England Asset Management -- and it, too, has a portfolio that includes dozens of stocks.
NEAM holds positions in quite a few dividend stocks that are among Berkshire Hathaway's holdings, but it also owns some that aren't. Here are three dividend stocks in Buffett's "secret portfolio" that are the most likely to soar in Q4.
1. Chevron
Chevron (CVX 0.37%) ranked as the fourth-largest position in Berkshire Hathaway's portfolio at the end of Q2. However, the oil and natural gas giant is also one of the largest holdings for NEAM. As a result, Chevron is actually Buffett's third-largest stock holding.
It has been a big winner for the legendary investor in 2022, vaulting upward by more than 30% year to date. I think the stock is likely to move even higher in Q4.
The recent decision by the Organization of the Petroleum Exporting Countries (OPEC) to cut production should lead to higher oil prices. In addition, the European Union plans to ban 90% of Russian oil imports by the end of this year. These two actions will probably serve as catalysts for Chevron stock.
Regardless of what happens with its share price, Chevron will continue rewarding investors with dividends. With a more than 25-year streak of annual payout hikes, it's a member of the exclusive group known as Dividend Aristocrats, and at the current share price offers a dividend yield of nearly 3.6%.
2. ExxonMobil
Berkshire Hathaway doesn't own any shares of ExxonMobil (XOM -2.78%). However, NEAM has a small position in the huge oil and natural gas company.
ExxonMobil has delivered an even more impressive year-to-date gain than Chevron has. Its shares are up more than 60%.
The same factors that seem likely to propel Chevron higher in Q4 should also work in ExxonMobil's favor. Higher natural gas prices could continue to boost the energy stock as well.
It's possible that ExxonMobil could continue to outperform Chevron. The stock is still attractively valued with a forward price-to-earnings ratio of 9.4 compared to Chevron's forward earnings multiple of 10.1.
Meanwhile, ExxonMobil's dividend yields nearly 3.5% at today's share prices. Like Chevron, the company is a Dividend Aristocrat. ExxonMobil has increased its dividend annually for 39 consecutive years, a little longer than Chevron's steak of 35 years.
3. Merck
Merck (MRK 0.37%) held a spot in Berkshire Hathaway's portfolio in the past, but it doesn't now. However, the conglomerate still has a stake in the drugmaker thanks to NEAM's 95,642 shares.
The investing guru might actually wish Berkshire Hathaway hadn't sold its Merck stake in 2021. The big pharma stock has jumped nearly 20% higher year to date in 2022.
Blockbuster cancer immunotherapy Keytruda and COVID-19 antiviral therapy Lagevrio are driving most of Merck's growth. However, a new product could help light a fire under the stock in Q4 and beyond. Merck recently announced positive results from a late-stage study of sotatercept in treating pulmonary arterial hypertension. The company now plans to move quickly to file for regulatory approvals of the drug.
The resilience of Merck's business during economic downturns should continue to attract investors looking for safe havens. So could its dividend, which yields nearly 3.2%.
