How much does Warren Buffett like dividends? We shouldn't draw any conclusions from the fact that Berkshire Hathaway doesn't pay a dividend. The correct answer to the question is that Buffett likes dividends a lot.
We can be confident in this answer, by the way. Why? Roughly 72% of Buffett's Berkshire Hathaway portfolio is invested in just five dividend stocks.
1. Apple
Apple (NASDAQ: AAPL) has ranked as Berkshire's largest holding for years. Although Buffett has sold a significant portion of his stake in Apple this year, including a notable reduction of nearly half recently, it's still Berkshire's top individual stock holding by far.
To be sure, Apple isn't known primarily as a dividend stock. Its forward dividend yield is a paltry 0.45%. However, the iPhone maker has paid and increased its dividend every year since 2012.
2. Bank of America
Bank of America (NYSE: BAC) remains Buffett's second-biggest position, at least for now. That could soon change, though, with Buffett selling big chunks of his BofA position in recent days.
While the legendary investor appears to have soured on Bank of America to some extent, he's probably still sweet on its dividend. BofA's forward dividend yield stands at nearly 2.6%. The financial services company has increased its dividend for 10 consecutive years.
3. American Express
American Express (NYSE: AXP) could soon take the No. 2 spot away from Bank of America. However, it's currently Berkshire's third-largest holding.
Buffett wrote to Berkshire Hathaway shareholders last year that American Express paid $302 million to Berkshire in 2022. He mentioned Amex again in his latest shareholder letter, saying that the company would increase its dividend payout by around 16% in 2024. He was close: The actual increase was 17%. American Express' dividend yields 1.1%.
4. The Coca-Cola Company
Berkshire has owned shares of The Coca-Cola Company (NYSE: KO) longer than any other stock. It's also one of the conglomerate's biggest positions. Buffett thinks that Coke is a "truly wonderful business" that Berkshire will "maintain indefinitely."
That's good news for Berkshire's dividend income. Coca-Cola's forward dividend yield tops 2.9%. The company is a Dividend King with 62 consecutive years of dividend increases.
5. Chevron
Chevron (NYSE: CVX) is Buffett's fifth-largest holding. Although Buffett trimmed his position in the oil giant in the first quarter of 2024, the move followed a large purchase of the stock in the fourth quarter of 2023.
Buffett doesn't own many high-yield dividend stocks, but Chevron is one of the few. Its forward dividend yield is a little shy of 4.1%. Chevron has increased its dividend for 37 consecutive years.
Are any of these stocks good picks for investors now?
Buffett hasn't bought additional shares of any of these top five dividend stocks lately. However, I think two are good picks for investors right now.
First, Apple could be poised for strong growth soon. The company's new generative AI capabilities only work on iPhone 15 Pro, iPhone 15 Pro Max, and newer models. There's a good chance, in my view, that a multi-year surge of iPhone upgrades could be on the way as customers buy new smartphones to take advantage of the artificial intelligence features.
Second, Chevron looks like a great choice for income investors. The company's dividend yield and track record of dividend hikes are impressive. I also like Chevron's potential growth opportunities in carbon capture and storage.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.
72% of Warren Buffett's Berkshire Hathaway Portfolio Is Invested in These 5 Dividend Stocks was originally published by The Motley Fool