For nearly six decades, Warren Buffett has generated wealth-building gains for Berkshire Hathaway's shareholders. Savvy investors thus scour Berkshire's $315 billion portfolio for clues on how to invest their own money.
If you're searching for some great dividend stocks to buy today, here are two of Buffett's favorites.
Coca-Cola
Berkshire Hathaway purchased Coca-Cola's (NYSE: KO) stock way back in 1988. In the more than three decades since then, the investment giant's holdings in the beverage leader have grown to a whopping $28 billion.
Don't make the mistake of thinking of Coca-Cola as just a soda company. The $300 billion behemoth has a vast selection of product offerings. Management has wisely expanded into healthier segments like milk, tea, coffee, juice, and mineral-infused water in recent years. Fairlife, Fuze Tea, Costa Coffee, Minute Maid, and Aquarius are among the drink maker's steadily growing collection of brands.
In addition to the strength of its brands, Coca-Cola's competitive moat is bolstered by its marketing and distribution expertise. With operations all around the world, it's able to recognize and respond to shifting consumer trends faster than many of its competitors.
With a proven history of launching and acquiring hit new products, this stalwart business has successfully grown its sales and profits for decades -- and will likely continue to do so for many years to come. All told, Coca-Cola has increased the cash payout to its shareholders for a remarkable 62 consecutive years. The stalwart dividend stock currently yields a solid 2.7%.
Occidental Petroleum
If you're more interested in learning about one of Buffett's recent buys, you'll want to check out Occidental Petroleum (NYSE: OXY). Berkshire has loaded up on the energy leader's stock over the past year. The investment conglomerate now holds nearly 30% of Occidental's shares, a stake valued at almost $15 billion.
Berkshire also obtained $10 billion worth of preferred stock and warrants to buy up to 80 million more shares of common stock as part of its move to help Occidental finance its merger with Anadarko Petroleum back in 2019. The deal bolstered the oil and gas company's assets in the Permian Basin and made it one of the largest energy producers in the U.S.
Occidental, in turn, has benefited from higher oil prices. The company's free cash flow rose to $1.3 billion in the second quarter, up from $1 billion in the prior-year period.
Yet Occidental is far more than just an oil driller. Its forward-thinking management team is taking steps to ensure Occidental will be a formidable player in the rapidly expanding carbon management industry.
As a leader in enhanced oil recovery techniques, Occidental has more than 40 years of experience with using carbon dioxide to boost the profitability of its energy production operations. This know-how, combined with the company's entrenched CO2 infrastructure, should provide it with a powerful competitive advantage in the carbon capture, utilization, and storage (CCUS) market.
Occidental is developing a process that can remove carbon from the atmosphere. The carbon can then be used for other purposes, such as the production of biofuels, or stored permanently underground. Occidental plans to license this technology to partners that will build carbon capture plants. CEO Vicki Hollub believes there will one day be more than 1,000 of these climate-friendly facilities operating across the globe.
In addition to the environmental benefits, the potential profits are enormous. ExxonMobil estimates that the market for carbon capture services could grow to an astounding $4 trillion by 2050. For its part, Occidental believes that its nascent carbon management business could rival its lucrative oil and gas operations in as little as 15 years.
Occidental's investors can thus expect larger dividends to be headed their way in the coming years. This innovative power producer's shares yield over 1.5% today.
Should you invest $1,000 in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $786,169!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 26, 2024
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
2 Warren Buffett Dividend Stocks to Buy Now was originally published by The Motley Fool