With the bull market now more than six years old, investors are looking for value and means of keeping upside in the stock market with at least some degree of protection. This often translates to investors wanting to own solid dividend-paying companies that are also safe stocks. One investor who loves dividends and well-run companies is Warren Buffett. It may seem ironic that his Berkshire Hathaway Inc. (NYSE: BRK-A) does not pay a dividend, but this would not be the first “do as I say rather than do as I do” example when it comes to Buffett.
24/7 Wall St. routinely tracks the top stock holdings of Buffett and other key financial market gurus. After looking at the changes in the full list of Buffett stocks from the first quarter of 2015, it seems that investors have many choices to invest in when it comes to great dividend payers that are well-established companies.
Riding Buffett’s coattails is nothing new. Just keep in mind that his cost basis is far lower in some of these positions than the current share price. That means that his effective yield is massively higher for him than what a new investor gets today.
24/7 Wall St. has modified the list of Buffett stocks to keep it relevant. Those stock positions that are mere token positions of a few million dollars (chump change or petty cash to Berkshire Hathaway) or a few hundred thousand shares have been screened out because they do not represent anything of substance on a Buffett scale. Also screened out of the dividend contenders were American depositary shares due to dividend volatility from currencies and sometimes different payment schedules.
The largest yields and stakes were seen in Verizon Communications Inc. (NYSE: VZ), General Motors Co. (NYSE: GM), Wells Fargo & Co. (NYSE: WFC), International Business Machines Corp. (NYSE: IBM), Coca-Cola Co. (NYSE: KO) and several other large cap well-heeled companies. These dividend payments from the top Buffett stocks look like they bring in a couple to few billion dollars a year to Berkshire Hathaway’s cash balances, and that is not including the receipts from preferred shares and what Buffett takes in from other non-public and partnered ownership stakes.
As of mid-May of 2015, the median dividend yield for the 30 stocks that make up the Dow Jones Industrial Average was 2.7%. The top 10 dividend stocks of Buffett’s nearly 50 equity holdings also yield a minimum of right at the 2.7% mark. Many of these stocks also fit in with the recently refreshed list of stocks to own for the next decade.
The top Buffett dividend yields also show the stake held by Berkshire Hathaway and the market value of the stake. Recent trading history, consensus analyst price target data and the total market cap of each company also have been identified in the description of each. These are the top Warren Buffett dividend stocks holdings that investors can buy now, ranked in order of highest yield to lowest.
> Dividend Yield: 4.4%
> Buffett Stake: 15 million shares
> Market Value: $750 million
Verizon Communications Inc. (NYSE: VZ) is the largest telecom. Buffett’s team likely feels like the company has less change ahead than rival AT&T with its major acquisition of DirecTV, although they also own DirecTV shares. Verizon has raised dividends endlessly, and its $2.20 dividend seems very fair now that the Verizon Wireless earnings are all in-house. The four-way price was just does not seem to matter to Team Buffett when it comes to Verizon.
Verizon shares were recently trading at $49.86. The stock has a consensus analyst price target of $51.78 and a 52-week trading range of $45.09 to $53.66. The company has a market cap of $203 billion.
> Dividend Yield: 4.1%
> Buffett Stake: 41 million shares
> Market Value: $1.5 billion
General Motors Co. (NYSE: GM) is relatively new on the dividend leaders list. Buffett had been raising his stake, but that was kept static in the first quarter. GM recently raised its dividend, and that yield of just over 4% rivals telecom and tobacco yields. All of that, and GM is one of the biggest brands in the world and is likely to be around for decades.
GM shares were at $35.71, below the consensus price target of $42.18. The stock has a market cap of $57 billion and a 52-week trading range of $28.82 to $38.99.
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