Does Warren Buffett recommend dividend stocks?
Buffett loves it when he does not have to touch his stakes and let the investments do all the work. He believes his investments are rewarded when the companies he has invested in increase dividends and focus on shareholder returns.
Warren Buffett loves a good dividend growth stock. Such companies consistently grow their profits year after year and elect to return those higher profits to shareholders. A business that's able to do that likely has a lot of the characteristics Buffett looks for in a company.
Whereas two brand-name, ultra-high-yield companies were bought hand over fist by billionaires in the fourth quarter, one absolutely supercharged monthly dividend stock, with a yield north of 15%, was shown the door.
- Apple (NASDAQ: AAPL)
- Amazon (NASDAQ: AMZN)
- Nvidia.
- Microsoft.
- Alphabet (parent company of Google)
- Meta Platforms.
- Tesla.
- Verizon Communications VZ.
- Philip Morris International PM.
- PepsiCo PEP.
- Altria Group MO.
- Bristol-Myers Squibb BMY.
- Medtronic MDT.
- Gilead Sciences GILD.
- Pioneer Natural Resources PXD.
With an impressive track record of dividend growth and a resilient business, Visa Inc (NYSE:V) is one of the best dividend stocks to buy according to Warren Buffett. In addition to Visa, Warren Buffett also enjoys dividends from Chevron Corp (NYSE:CVX), Coca-Cola Co (NYSE:KO) and American Express Company (NYSE:AXP).
- The Kraft Heinz Company (NASDAQ:KHC)
- The Kroger Co. (NYSE:KR)
- HP Inc. (NYSE:HPQ)
- Aon plc (NYSE:AON)
- Capital One Financial Corporation (NYSE:COF)
- Coca-Cola Co (NYSE:KO)
- Moody's Corporation (NYSE:MCO)
- Chevron Corp (NYSE:CVX)
In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments. How Can You Make $1,000 Per Month In Dividends? Here are the steps you can take to build yourself a sufficient dividend portfolio.
- Clearway Energy (NYSE: CWEN)(NYSE: CWEN.A) offers a 7.7% dividend yield. ...
- Oneok's (NYSE: OKE) dividend yields 5.9%. ...
- Vici Properties (NYSE: VICI) pays a 5.7% yielding dividend. ...
- Verizon (NYSE: VZ) pays a 6.7% dividend yield.
There are a couple of reasons that make dividend-paying stocks particularly useful. First, the income they provide can help investors meet liquidity needs. And second, dividend-focused investing has historically demonstrated the ability to help to lower volatility and buffer losses during market drawdowns.
What stock is Warren Buffett buying 2024?
These were the stocks Buffett had in his portfolio heading into 2024. Some top picks of Berkshire are Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO) and Chevron Corp (NYSE:CVX).
At its core, Warren Buffett's investing strategy is not all that complicated: Buy businesses, not stocks. In other words, think like a business owner, not someone who owns a piece of paper (or these days, a digital trade confirmation).
Warren Buffett does not invest in gold. He has invested almost $1 billion in silver, so the reason for his aversion is not simply a dislike for precious metals. The explanation for Buffett's dislike of gold and for his enthusiasm about silver stems from his basic value investing principles.
| Stock | Forward dividend yield |
|---|---|
| Exxon Mobil Corp. (XOM) | 3.5% |
| Johnson & Johnson (JNJ) | 3% |
| Procter & Gamble Co. (PG) | 2.3% |
| Home Depot Inc. (HD) | 2.4% |
| Stock | Dividend yield |
|---|---|
| Enbridge Inc. (ENB) | 7.6% |
| Ecopetrol SA (EC) | 14.6% |
| United Parcel Service Inc. (UPS) | 4.2% |
| OneMain Holdings Inc. (OMF) | 8.3% |
- High-Yield Monthly Dividend Stock #4: ARMOUR Residential REIT (ARR)
- High-Yield Monthly Dividend Stock #3: AGNC Investment Corporation (AGNC)
- High-Yield Monthly Dividend Stock #2: Ellington Residential Mortgage REIT (EARN)
- High-Yield Monthly Dividend Stock #1: Orchid Island Capital (ORC)
However, one of the "ingredients" to Berkshire Hathaway's success that doesn't receive enough credit is Buffett's love for dividend stocks. Companies that pay a regular dividend to their shareholders tend to be recurringly profitable, time-tested, and are capable of providing transparent long-term growth outlooks.
Companies that pay dividends are often those that have stood the test of time. They are successful, profitable businesses that have gone through numerous cycles and come out ahead. Of the 49 stocks in Buffett's portfolio, 31 pay dividends. He will receive nearly $6 billion in dividends from those stocks in 2023.
Coca-Cola has paid shareholders a little more each year for decades -- 61 consecutive years of raises, to be exact. You can see below how that can snowball over time. Warren Buffett's $736 million in annual dividends from Coca-Cola today is almost like getting his initial investment back each year.
Golub Capital. Golub Capital (NASDAQ: GBDC) ranks as the juiciest dividend stock that Buffett owns. It currently offers a dividend yield of over 10%. Golub has also delivered solid gains so far in 2023 with an even better total return.
Who is the best dividend investor of all time?
Warren Buffett is widely considered the greatest investor of all time, and much of his investment strategy relies on collecting dividend payments.
For example, say I need to earn $50,000 a year to live comfortably and my average dividend yield is 5%. So, I would need to own $50,000 / 0.05 = $1 million worth of shares to meet my income needs.
A well-constructed dividend portfolio could potentially yield anywhere from 2% to 8% per year. This means that to earn $3,000 monthly from dividend stocks, the required initial investment could range from $450,000 to $1.8 million, depending on the yield.
To generate $5,000 per month in dividends, you would need a portfolio value of approximately $1 million invested in stocks with an average dividend yield of 5%. For example, Johnson & Johnson stock currently yields 2.7% annually. $1 million invested would generate about $27,000 per year or $2,250 per month.
Companies like Pfizer Inc. (NYSE:PFE), Philip Morris International Inc. (NYSE:PM), and 3M Company (NYSE:MMM) have maintained a track record of consistently increasing their dividend payouts over the years, while also providing dividend yields surpassing the market average, exceeding 5%.
