UPDATED BY: Shauvik Haldar on December 7, 2018.
When it comes to value investing, no investor compares to Warren Buffett. The Oracle of Omaha continues to inspire us with incredible worth ethic, sound investment advice and an immutable track record. However, for income investors, the best source of inspiration is Mr. Buffett’s stock holdings.
Buffett’s company, Berkshire Hathaway (BRK-A ), owns 43 stocks, according to its latest 13F filing with the U.S. Securities and Exchange Commission (SEC). As it turns out, Berkshire’s holdings are filled with top dividend plays that can be used by income investors to generate passive earnings and consistent dividend growth.
In the following section, we present the top ten dividend stocks owned by Berkshire Hathaway. To ensure we adequately reflect the company’s holdings, we limit our picks to stocks in which Berkshire has a stake of $100 million or more.
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Here is the list of the top 10 high-yielding stocks under Buffett’s banner.
|Ticker||Company||Annualised Dividend Payout ($)||Closing Price ($) *||Dividend Yield (%) *||Berkshire’s Ownership ($ million) **|
|(KHC )||Kraft Heinz Co||$2.50||$49.52||5.05%||$17,946|
|(STOR )||Store Capital Corp||$1.32||$30.85||4.28%||$517|
|(GM )||General Motors Company||$1.52||$35.70||4.26%||$1,766|
|(PSX )||Phillips 66||$3.20||$92.52||3.46%||$1,740|
|(WFC )||Wells Fargo & Co||$1.72||$51.08||3.37%||$23,251|
|(SYF )||Synchrony Financial||$0.84||$25.15||3.34%||$647|
|(KO )||The Coca-Cola Co||$1.56||$49.39||3.16%||$18,476|
|(QSR )||Restaurant Brands International Inc||$1.80||$57.12||3.15%||$500|
|(JPM )||JPMorgan Chase & Co.||$3.20||$105.14||3.04%||$4,024|
|(PNC )||PNC Financial Services Group Inc||$3.80||$129.24||2.94%||$829|
Stay up to date with the highest-yielding stocks and their latest ex-dividend dates on our High Dividend Stocks by Yield page.
1. Kraft Heinz Co. (KHC )
Berkshire Ownership: $17,946 million
In terms of dividend yield, no company in Berkshire’s portfolio outshines Kraft Heinz Co. The food conglomerate yields 5.05%.
The merger between Kraft and Heinz in 2015 created a mega company whose dividend has grown every year since inception. In its latest Q3 results, KHC reported a 2.6% increase in organic net sales. However, the firm’s earnings took a hit compared to the same period last year mostly because of impairment charges and higher costs. One bright spot for the firm was the Latin American market.
Having said that, the company’s ongoing initiatives – spanning from optimized inventory management to improved focus on e-commerce channel – are likely to bear fruits in the coming quarters. Nevertheless, as a consumer staple company, KHC stands to benefit not only from an improved domestic economy but also during cyclical downturns or even a recession.
Check out our Dividend Assistant tool that will help you track the upcoming dividend payments of your stock investments.
2. Store Capital Corporation (STOR )
Berkshire Ownership: $527 million
The diversified real estate investment trust (REIT) yields 4.80%, thanks to its emerging status as a leader in middle-market real estate.
The recently passed tax reforms helped STOR’s attractiveness as an investment option. Unlike stocks, REITs are spared corporate income taxes so long as they distribute 90% of their earnings to shareholders. This is a solid value proposition for income investors.
3. General Motors Company (GM )
Berkshire Ownership: $1,766 million
General Motors is one of the biggest turnaround stories of the post-crisis period. After staving off collapse, the company has been at the forefront of the decade-long auto boom. This has translated into strong, albeit inconsistent, dividend growth since the financial crisis.
GM has been trying to catch up with its autonomous vehicle rivals. In order to support this strategy, the company recently decided to get rid of its less popular vehicles and cut down production – a move that brought sharp criticism from both employees and the politicians.
Nevertheless, GM currently yields close to 4%, which is double the consumer goods average.
4. Phillips 66 (PSX )
Berkshire Ownership: $1,740 million
Phillips 66 is an energy manufacturing and logistics company enjoying a broad uptrend, thanks to surging oil prices. The company reported strong third-quarter earnings compared to the same period last year, mainly supported by refining and midstream business segments.
PSX yields a greater amount than the basic materials average. Initiatives to stabilize oil prices could gradually reverse the downward plight of oil prices witnessed recently and help PSX grow its bottom line.
5. Wells Fargo (WFC )
Berkshire Ownership: $23,251 million
As one of America’s largest banks by total assets, Wells Fargo is backed by a diversified business model and an improving domestic economy.
Although the bank was recently hit by scandals, it beat analyst expectations when it reported third-quarter revenue figures. The bank is currently in a turnaround mode to reduce operational costs and embrace digital banking transformation. It seems to have gained back consumer trust as growth in consumer checking accounts and loan origination helped it deliver better results in the third quarter.
The bank has been growing its dividend over the last six years in a row, with the last round of increases coming in August 2018.
6. Synchrony Financial (SYF )
Berkshire Ownership: $647 million
The consumer financial services company, incorporated in 2003, currently yields 3.34%. It offers a range of deposit products. In addition, it offers a range of credit products through various programs and encompasses a wide network of retailers, manufacturers, buying groups and healthcare service providers.
In its most recent third-quarter earnings disclosure, SYF reported a 9% growth in net interest margin and a strong growth in its retail card division, where loan receivables were driven up by the acquisition of PayPal Credit program.
Given the company’s continued investment in digital capabilities, success in signing up new partnerships and a strong balance sheet, one can expect the company to deliver strong returns for its shareholders.
7. Coca-Cola (KO )
Berkshire Ownership: $18,476 million
When it comes to established brands, very few companies can measure up to Coca-Cola. The stock is a staple of the Buffett portfolio, yielding a solid 3.16%. A dividend-growth streak of 55 years makes KO one of the best stocks for any aspiring income investor.
Interested in learning more about Warren Buffett’s investment approach? Explore why the Oracle of Omaha looks for wide economic moats here.
8. Restaurant Brands International (QSR )
Berkshire Ownership: $500 million
Restaurant Brands International offers an ownership stake in some of the world’s largest quick-service restaurants, including Burger King, Popeyes and Tim Hortons. The company enjoys more than $30 billion in total sales across 24,000 locations worldwide.
Though not an established dividend payer, QSR has paid out higher yields the last two years.
9. J.P.Morgan (JPM )
Berkshire Ownership: $4,024 million
With a history of over 200 years, JPM is a global financial institution that is also the largest U.S. bank in terms of asset base, which is well over $2.5 trillion.
The bank proved its dominance in the U.S. market when it beat the estimated earnings for the 15th consecutive time when it announced its third-quarter results. The bank continued to grow its profitability in its biggest division – consumer banking – by a massive 60%.This, in turn, helps the bank reduce the provision for credit losses, which currently stands at just under a billion, down from $1.5 billion a year earlier.
Despite concerns over sluggish loan growth and stagnant profitability, the bank continues to remain bullish about the U.S. economy in the long run as it plans to stay on the course of opening more retail branches, especially in Philadelphia.
If things go well, the bank might continue to raise dividends for the eighth time in a row. Keep in mind that the bank has increased its quarterly dividend payout by more than 66% since the beginning of 2017.
10. PNC Financial Services Group (PNC )
Berkshire Ownership: $829 million
As one of America’s largest diversified regional banks with an asset base of nearly $380 billion, PNC has been growing its dividend for 7 years in a row.
The regional powerhouse has been doing pretty well recently, having reported a 30% growth in its bottomline in the third-quarter compared to the same period a year ago. The bank was able to improve its bottomline by a significant level across its corporate banking, asset management and retail banking divisions. Moreover, there was a healthy bump in the bank’s net interest income. Improvement in credit quality was also another factor that could bode well with investors.
Be sure to visit our complete recommended list of the Best Dividend Stocks.
The Bottom Line
The dividend stocks laid out before you today are owned and approved by the Oracle of Omaha himself. The diverse mixture of stocks provides diversification benefits as well as long-term income growth.
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