Dividend Investing: Warren Buffett’s Top 3 Dividend Stock Picks

Warren BuffettThere’s no denying that when it comes to investing, Warren Buffett is a legend. His status as the second wealthiest person in the United States is more than enough to convince investors that you might want to emulate his every move. Checking out his portfolio for dividend stock picks isn’t a bad idea.

Most investors, though, only pay attention to his latest stock picks and don’t realize that a significant portion of his holding company’s income, Berkshire Hathaway Inc. (NYSE:BRK.A), comes from dividend payouts from companies in which Berkshire has a vested share.

Most of the companies in Berkshire’s portfolio dish out a dividend. It’s easy to say then that Buffett loves his dividends and for good reason: dividend income has greatly contributed to Berkshires success. If you invested $1,000 in 1964 when Buffett took over Berkshire Hathaway, you’d have a cool $11.6 million today. (Source: “Here’s how rich you’d be if you had bet $1,000 on Warren Buffett way back when,” Business Insider, March 2, 2015.)

If you’re looking to build wealth with dividends, you can do no wrong than taking a look at Warren Buffett’s holdings. Here are three top dividend stocks that you might want to take a look at.


1. The Coca-Cola Co

The Coca-Cola Co (NYSE:KO) is an iconic American brand that has paid uninterrupted dividends to investors since 1893. How has the company been able to do this? Well, if you ask anyone in the world if they’ve heard of “Coke,” chances are that 99.9% will nod their heads.

Coca-Cola has built a massive economic moat that competitors can only dream of having, which is a common theme in the companies Buffett owns.

The company’s brand is so iconic that it has a legion of followers that are willing to pay a premium over less expensive generic brands.

Coca-Cola’s formula for its drink is patented, meaning there is no way another company will ever be able to replicate it. They can come close, but Coca-Cola will never have to worry about another company selling an identical product and stealing market share.

Today, KO stock yields a 3.2% dividend. Coca-Cola isn’t going anywhere soon, so those dividends will continue to increase. The company has increased their dividend payout every year since 1963.

2. Verizon Communications Inc.

Verizon Communications Inc. (NYSE:VZ) is one of the largest communication technology companies in the world. It’s also the last such company left in the Dow Jones Industrial Average index after Apple Inc. (NASDAQ:AAPL) replaced AT&T Inc. (NYSE:T) this year, which speaks to its strength.

Verizon currently has a 4.44% dividend yield and has been raising it for the last eight years. Investors should see nice returns.

3. General Motors Company

General Motors Company (NYSE:GM) has had to deal with bankruptcy, a government bailout, and a few recalls over the last decade, but the company is still recognized as one of the top auto brands in the world.

Auto sales have rebounded since the financial crisis and the company reinstated their dividend in 2014 after pausing to restructure. General Motors may have some hard times during economic downturns, but its dividend is just too juicy to resist. At today’s price, GM stock currently yields 5.28%.

Buffett also seems to love this stock. Berkshire Hathaway just increased its holding of General Motors in the fourth quarter by one million shares to 41 million.