The 10 High Dividend Stocks Owned by Warren Buffett
By: Ned Piplovic,
Berkshire Hathaway’s most recent — and only — dividend distribution under Warren Buffett’s leadership occurred in 1967. While Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) no longer distributes dividends, income investors can still take advantage of the company’s portfolio and collect a significant dividend income by investing in some, or all of the high dividend stocks that are owned by Warren Buffett.
The dividend distribution issue keeps rearing its head occasionally. However, while some investors still hope to receive some kind of cash distribution in the future, most Berkshire Hathaway shareholders are content with its robust asset appreciation. Furthermore, most of the underlying holdings in the current Berkshire Hathaway portfolio distribute dividends to their shareholders. Therefore, income investors could build their own dividend income portfolio by investing in Berkshire Hathaway’s high dividend stocks.
Currently, the Berkshire Hathaway portfolio comprises 47 companies with a combined total market value of more than $550 billion. Of the entire portfolio, 33 companies, or more than 70%, offer some kind of dividend distribution. While the lowest yield is only 0.48% — Mastercard, Inc. (NYSE:MA), the top yield is nearly 6%.
The simple dividend yield average for the 33 dividend-paying holdings is 2.47%. However, weighing the average yield by its share of market value makes it 6.5% higher, or 2.63%. Furthermore, at 3.84%, the simple average yield of the top 10 holdings is twice the 1.77% average yield of all the holdings in the Berkshire Hathaway portfolio. Similarly, the weighted average yield of 4.45% for the top 10 companies is 83% higher than the weighted ratio of all these 33 companies.
Additionally, the top 10 holdings by their current dividend yield have been delivering dividend distributions to their shareholders for a period that ranges from four to 192 years, for an average of nearly seven decades. Furthermore, these 10 companies have an average streak of nearly seven consecutive annual dividend hikes.
Here are the top ten dividend-paying Berkshire Hathaway holdings:
The 10 high dividend stocks owned by Warren Buffett: #10
JPMorgan Chase & Company (NYSE:JPM)
Dividend Yield: 2.6%
While having the lowest current yield of the group, JPMorgan Chase’s current yield of 2.6% is still more than comofrtably above the overall market yield average of approximately 2%. Additionally, as its initial dividend payout was in 1827, JPMorgan Chase has the longest history of dividend payouts in this group.
Over the trailing 12 months, the company has delivered total a total return of more than 8%. Furthermore, over the past three and five years, JPMorgan Chase rewarded its shareholders with total returns of 40% and 184%, respectively.
The 10 high dividend stocks owned by Warren Buffett: #9
US Bancorp (NYSE:USB)
Dividend Yield: 3.4%
US Bancorp hiked its quarterly dividend payout from $0.37 to $0.42 for its distribution in October 2019 and has kept this payment amount since. This new quarterly amount corresponds to a $1.68 annualized distribution and a 3.4% forward dividend yield.
With ten years of consecutive dividend hikes, the company has advanced its annual dividend amount at an average annual rate of 23.7% over the past ten years. With a 5.8% total loss over the trailing 12-months, the company has better treated its long-term investors, with returns in the last five years of 46.4%.
The 10 high dividend stocks owned by Warren Buffett: #8
The PNC Financial Services Group (NYSE:PNC)
Dividend Yield: 2.8%
PNC has boosted its annual dividend payout over the last ten consecutive years since the 2008 financial crisis. During that period, the annual dividend payout amount advanced more than 11-fold, or increased at an average growth rate of nearly 30% per year.
The company’s current annualized dividend of $4.60 corresponds to a 2.8% yield, which, when combined with the stock’s asset appreciation, produced a total return of nearly 9% over the past year. Long-term total returns were even better at 17.4% and 115.5% over the last three and five years, respectively.
The 10 high dividend stocks owned by Warren Buffett: #7
United Parcel Service, Inc. (NYSE:UPS)
Dividend Yield: 2.5%
Since beginning its current streak in 2002, UPS has raised its annual dividend payout from $0.74 to $4.04. This current annual payout is equivalent to a 2.5% forward dividend yield, which is near the company’s own 2.95% average yield over the past five years.
Dividend distributions have been helpful but completely overshadowed by the the company’s robust asset appreciation. In the trailing 12 months, UPS has grown 44.7% and delivered 47.3% in total returns. Its three-year returns were more modest at 35.3%, but in the last five years the company has appreciated nearly 112%.
The 10 high dividend stocks owned by Warren Buffett: #6
Phillips 66 (NYSE:PSX)
Dividend Yield: 4.9%
Phillips 66 has boosted its annual payout every year since beginning dividend distributions in 2012. Since then, the company has enhanced its annual distribution amount four-fold. This level of advancement corresponds to an average growth year of nearly 22% per year.
The share price suffered considerably in 2020, taking a loss of 25.8% and bringing the three-year returns down to an 18.6% decline. In the last five years, however, Phillips 66 has brought a more comfortable 18.1% in share growth and capital appreciation.
The 10 high dividend stocks owned by Warren Buffett: #5
STORE Capital Corporation (NYSE:STOR)
Dividend Yield: 4.6%
The STORE Capital Corporation has delivered one of the best balances between rising dividend payouts and asset appreciation. Since its formation in 2014, the company has enhanced its annual dividend payout over 60%, which is equivalent to an average growth rate of more than 12%. The current $1.44 annualized dividend amount yields 4.6%.
STORE Capital suffered a near 13% loss throughout the trailing 12 months, but that defeat did little to affect the robust capital gains of the few years beforehand — in the last three years, the company has returned 44.1%, and in the last five years, 74.5%.
The 10 high dividend stocks owned by Warren Buffett: #4
Verizon Communications, Inc. (NYSE:VZ)
Dividend Yield: 4.4%
With 16 years of consecutive annual dividend hikes, Verizon has raised its quarterly dividend payout from $0.62 to $0.63, which corresponds to a $2.51 annualized distribution and a 4.4% dividend yield.
Despite an increased share price volatility, Verizon has managed to combine its capital gains with the rising dividend distributions for a total return of roughly 5% over the trailing 12 months. Long-term total returns have exceeded 24% over the last three years and were more than 61% over the past five years.
The 10 high dividend stocks owned by Warren Buffett: #3
Wells Fargo & Company (NYSE:WFC)
Dividend Yield: 1.2%
Wells Fargo had a difficult year in 2020 and was forced to reduce its quarterly dividend accordingly. In mid-2020, the company dropped its regular $0.51 quarterly distribution to $0.10, bringing its dividend yield to 1.2%. Before this, the company had continually increased its dividend every year since 2010, and is likely to return to this tradition following this considerable pullback.
The company’s stock price is down 30.6% in the trailing 12 months, temporarily erasing the returns of the last three and five years. This means Wells Fargo is trading at a low price, and investors looking for a bargain may consider now the time to buy.
The 10 high dividend stocks owned by Warren Buffett: #2
General Motors Company (NYSE:GM)
Dividend Yield: –
After emerging from a government bailout in 2014, GM boosted its annual dividend twice. However, it has not increased its annual payout over the past four years. The flat $1.52 annual dividend is also temporarily defunct, as the company stopped paying its dividend after the first quarter of 2020 and has yet to resume.
Despite its likely temporary halt on dividend payments, investors have been notably rewarded by the company in the trailing 12 months — its capital appreciation totaled nearly 50%, and in the last five years, the company has doubled in valued with a total return of 102.7%.
The 10 high dividend stocks owned by Warren Buffett: #1
The Kraft Heinz Company (NASDAQ:KHC)
Dividend Yield: 5%
After reducing its dividend in the first quarter of 2019, the Kraft Heinz Company has kept its dividend distributions level at a quarterly payout of $0.40. This corresponds to an annual distribution of $1.60 and a forward yield of 5%.
The company has experienced gradual decline in the last five years, during which it is down 44.3%, but KHC has begun a steady and seemingly consistent increase in the trailing 12 months, having grown 8.6% in share price and bringing investors nearly 14% in total returns.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.