Warren Buffett loves dividends stocks. While his own Berkshire Hathaway Inc. (NYSE/BRK-A) does not pay any distributions, some of his largest positions are among the best dividend-paying stocks in the market.
But at over $200,000 apiece, one Class A share of Berkshire Hathaway stock is out of reach for most of investors. But by going through individual names in Buffett’s holdings, we can pick his top dividend names for our own portfolio. Let’s take a look at his top three.
Also Read: Warren Buffett’s Top 5 Dividend-Paying Stocks for 2015
Berkshire Hathaway’s 3 Best Dividend Stocks in 2015
Warren Buffett’s Dividend Machine
The Coca-Cola Company (NYSE/KO) is perhaps Buffett’s best-known holding. For more than five decades, Coca-Cola has increased its dividends in each year. Today the company pays out an annual dividend of $1.32 per share, which translates into a yield of 3.3%. (Source: Coca-Cola, last accessed June 23, 2015.)
Coca-Cola continues to find ways to boost revenues through price increases and marketing new products. Overall, investors are expecting the business to grow drink volume by four percent annually through the rest of the decade. Growing sales should translate into many more dividend hikes in the years ahead.
Berkshire Hathaway’s Favorite Bank
Wells Fargo & Company (NYSE/WFC) is now Berkshire Hathaway’s largest holding; Warren Buffett has 23.7% of his portfolio allocated to his favorite bank. Wells Fargo has a dividend yield of 2.6% or $1.50 per share.
While low interest rates have suppressed net interest margins, a Federal Reserve rate hike later this year could be a big boost to bank profits. The continued recovery in the U.S. economy is also likely to support its loan segment and wealth management businesses in 2015.
One Dividend Stock to Consider at Any Time
Finally, Wal-Mart Stores Inc. (NYSE/WMT) is Warren Buffett’s fifth-largest holding. It’s a classic Buffett stock—an industry leader with a strong competitive advantage. For the last four decades, the company has hiked its dividend every year.
Wal-Mart’s competitive advantage comes from its remarkable economic scale which resulted in enormous operation efficiency. The company uses its bargain over suppliers to lower its cost and then passes lower prices compared to other competitors to customers.
This advantage has translated into a reliable income stream for shareholders. Each year the company repurchases billions of dollars of its own stock. Today, the stock pays out $1.96 per share in dividends, which translates into a current yield of 2.7%.
Bottom line; Warren Buffett is likely the greatest investor of all time. His portfolio has grown significantly over the years. That’s why it doesn’t hurt to peek over his shoulder for inspiration on some of the best investments.
Also Read: Best Dividend Stocks for July 2015