Dividend enthusiasts share an affinity for one thing as much as they do for high yields – consistency. The allure of stocks that deliver quarterly dividends like clockwork, without the turbulence, is undeniable. It may come as a surprise, but Warren Buffett, famed for his value investments, harbors a dividend-focused side. Among Berkshire Hathaway’s holdings, nearly $212 billion is allocated to three impeccably reliable dividend stocks.
1. Apple – The Tech Giant That’s Also a Dividend Dynamo
At first glance, Apple (NASDAQ: AAPL) may not scream “dividend stock,” but it’s Warren Buffett’s favorite next to Berkshire itself. With a whopping stake of nearly $161.8 billion, Apple dominates the conglomerate’s portfolio. While its dividend yield sits at a modest 0.55%, Apple compensates with remarkable dividend growth. Since initiating its dividend program in 2012, the company has boosted payouts by over 150%. Apple’s fiscal health is unquestionable, as it generated an astonishing $26 billion in operating cash flow in the last quarter. Beyond dividends, Apple’s services division is thriving, and exciting new products like the Vision Pro mixed-reality headset are on the horizon.
2. Bank of America – The Resilient Banking Giant
Berkshire Hathaway stands as the largest shareholder of Bank of America (NYSE: BAC) with a 13% ownership stake valued at nearly $28.3 billion, making it Buffett’s second-largest holding after Apple. While the bank had to cut its dividends during the 2007-2009 financial crisis, it has since increased payouts by over 20-fold. Currently boasting a dividend yield of 3.5%, Bank of America’s share price has been weighed down by regional banking challenges and macroeconomic headwinds. However, the bank remains financially robust and is well-positioned to weather the storm. With the potential for a significant rebound in the near future, this is a dividend stock that shouldn’t be overlooked.
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3. Coca-Cola – The Evergreen Dividend King
Coca-Cola (NYSE: KO) is a cornerstone of Berkshire Hathaway’s portfolio, with a valuation of nearly $21.7 billion, ranking as Buffett’s fourth-largest position. Coca-Cola offers an attractive dividend yield of 3.4%, but what’s truly impressive is its track record as a Dividend King, with 61 consecutive years of increasing dividends. This impressive streak is upheld by solid earnings and cash flow generation. In the second quarter of 2023, Coca-Cola reported a 34% year-over-year increase in earnings per share and a boost in operating cash flow to $4.6 billion. While it may not offer jaw-dropping capital gains, Coca-Cola’s resilient business and steady dividend make it a compelling choice, particularly for conservative, long-term investors.
Unlock the secrets behind Warren Buffett’s dividend stock strategy with these three stalwarts that form the bedrock of his $212 billion portfolio.
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