Here Are Warren Buffett's Best Performing Dividend Stocks

Warren Buffett's Berkshire Hathaway Inc. Class A (NYSE: BRK-A) lists numerous dividend stocks among its holdings, with the highest-yielding companies returning at least 3%. These dividend-paying stocks have created over $680 billion in value for shareholders, who have seen a 20.1% average annual return on BRK’s Class A shares. 

In summer 2022, 30 of 47 current Berkshire Hathaway-owned stocks pay dividends. 

As of this month, the top 10 ranged from 2.9% to 5.27% in annual yields, and 45 of the 47 went between 3.87% and 101.11% per broker's estimated price target upsides.

In the meantime, Berkshire Hathaway has also begun dumping stocks that are not performing well enough to be considered a worthwhile portfolio investment, including Store Capital Corp. STOR, General Motors Company GM and Verizon Communications Inc. VZ

Of the nearly 50 stocks in Buffett’s portfolio, four of its higher dividend-paying stocks currently provide superior yield.

Apple Inc. AAPL 

  • Dividend yield: 0.55%
  • Shares held: 894,802,319
  • Holding value: $122,337,373,000
  • Percent of portfolio: 40.76%

While Apple’s dividend yield may be a mere 0.55%, it still contributes a large portion to Berkshire Hathaway’s income stream simply due to the number of shares held. 

In Q1 2022, Berkshire Hathaway took advantage of a short-term drop to buy an additional 3.8 million shares, or 0.3%, to add its already healthy Apple holdings. Buffett, over the years, has made no secret that he loves Apple, and it continues to be one of the few tech stocks he’s consistently invested in. 

In a CNBC interview, he said, "It's probably the best business I know in the world. And that is a bigger commitment than we have in any business except insurance and the railroad."

The investment has paid out handily, with a return of 444% since the end of Q1 2016 and four times better than the market.
Bank of America Corp. BAC

  • Dividend yield: 2.53%
  • Shares held: 1,010,100,606
  • Holding value: $31,444,432,000
  • Percent of portfolio: 10.48%

Berkshire Hathaway has cut loose many of its bank-stock holdings over recent years but remains steadfast in its Bank of America investment as its largest shareholder. Buffett took an active interest in BAC 11 years ago when he put $5 billion into the bank during the recession and got a preferred stock yield of 6%, which allowed him to purchase Bank of America common stock at a considerable discount. He gained $12 billion in profit from that move alone. 

The Berkshire Hathaway stake in BAC is worth $31 billion and represents 10.5% of the company's total portfolio value. Meanwhile, Berkshire Hathaway is Bank of America's largest shareholder, at 12.6% of its shares outstanding.

Citigroup Inc. C

  • Dividend yield: 3.98%
  • Shares held: 55,155,797
  • Holding value: $2,536,616,000
  • Percent of portfolio: 0.85%

Citigroup is a global financial services company doing business in more than 100 countries and jurisdictions in primarily two segments — the global consumer banking segment and the institutional clients' group. The bank's primary operations are cross-border banking needs for multinational corporations, investment banking and trading and credit card services in the United States. Citigroup issues dividends to shareholders from excess cash Citigroup generates.

Kraft Heinz Co. KHC

  • Dividend yield: 4.17%
  • Shares held: 325,634,818
  • Holding value: $12,419,712,000
  • Percent of portfolio: 4.14%

The formerly Pittsburgh-based company’s logo — its headquarters is now in Chicago — may no longer be perched on the NFL Steelers' home stadium this year. Still, Kraft Heinz remains the third-largest food and beverage manufacturer in North America behind PepsiCo Inc. PEP and Nestle S.A. ADR NSRGY and is the fifth-largest player in the world. Beyond its company-branded products, the firm's portfolio includes Oscar Mayer, Velveeta and Philadelphia Cream Cheese.
Outside North America, the firm's global reach includes a distribution network in Europe and emerging markets that drive around one-fifth of its consolidated sales base, as its products are sold in more than 190 countries and territories.

The reason for Buffett and others to invest in dividend stocks is simple. They consistently outperform stocks that don’t pay dividends. Berkshire Hathaway is on pace to collect more than $6 billion in passive income.

Related News Highlights

  • Arrived Homes, the company that allows investors to buy shares of single-family rental homes, is set to launch 14 new rental properties on its platform with a minimum investment of $100. Average dividend yields on previous offerings range from 3% to 7.6% annually. 

  • The private debt investment platform Percent launched a new corporate debt offering for Taiger, an international VC-backed software company, with a 15-17% APY. The platform’s recent H1 update shows an average historical yield of 12.38%.

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