Investing

Warren Buffett’s Highest Yielding Stocks Are Perfect For Passive Income Fans

Lee Jackson

Published: April 2, 2024 8:15 am

If any investor has stood the test of time, it’s Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock star-like presence in the investing world, and his annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors. 

Known for his long buy-and-hold strategies and massive portfolio of public and private holdings, he remains one of the world’s preeminent investors. With interest rates edging higher again, it makes sense to add dividend-paying stocks that will rally when rates ultimately get cut at some point this year. 

Most dividend investors seek solid passive income streams from quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Shared ideas for earning passive income include investments, real estate, or side hustles.

We screened the Berkshire Hathaway portfolio, looking for the highest-yielding stocks that Warren Buffett owns, and found six companies that are all buy-rated on Wall Street that pay big, and most importantly. Dependable dividend income.

Chevron

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This integrated giant is a safer way for investors looking to get positioned in the energy sector and has a sweet 4.13% dividend. Chevron Corporation (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

The company operates in two segments:

• Upstream 
• Downstream.

The Upstream segment is involved in the following:

• Exploration, development, production, and transportation of crude oil and natural gas
• Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
• Transportation of crude oil through pipelines; and transportation, storage
• Marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum products
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

It also involves cash management, debt financing, insurance operations, real estate, and technology businesses.

Chevron Corporation announced last fall that it has entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Citigroup

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This is a top bank that has recently been forced to layoff  five thousand employees. Warren Buffett bought a massive $2.5 billion worth of stock back in the summer of 2022 that pays a dependable 3.32% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.

Citigroup offers:

• Consumer banking and credit
• Corporate and investment banking
• Securities brokerage
• Transaction services
• Wealth management services

Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).

Trading at a still cheap 9.5 times estimated 2024 earnings, this company looks very reasonable in a volatile stock market and a dramatically lagged sector.

The Coca-Cola Company

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This company remains a top Warren Buffet holding, as he owns a massive 400 million shares and pays a dependable 3.17% dividend. Coca-Cola (NYSE: KO) is the world’s largest beverage company, offering consumers more than 500 sparkling and still brands.

Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the Company’s portfolio features 20 billion-dollar brands, including:

• Diet Coke
• Fanta
• Sprite
• Coca-Cola Zero
• Vitaminwater
• Powerade
• Minute Maid
• Simply
• Georgia
• Del Valle

Globally, they are the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks.

Through the world’s most extensive beverage distribution system, consumers in more than 200 countries enjoy the company’s beverages at a rate of more than 1.9 billion servings a day. It’s also important to remember that the company owns 16.7% of Monster Beverage (NASDAQ: MNST), which continues to deliver big numbers.

HP

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Warren Buffett stunned Wall Street in 2022 when Berkshire Hathaway reported a purchase of 121 million shares of the venerable tech giant, but he has been selling shares recently, which yield 3.66%. HP, Inc. (NYSE: HPQ) provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally.

The company operates through three segments:

• Personal Systems
• Printing
• Corporate Investments

The Personal Systems segment offers:

• Commercial and consumer desktop and notebook personal computers
• Workstations, thin clients, commercial mobility devices
• Retail point-of-sale systems, displays, and peripherals,
• Software, support, and services.

The printing segment provides consumer and commercial printer hardware, supplies, solutions, and services.

The corporate investments segment is involved in HP Labs’ business incubation and investment projects. It serves individual consumers, small and medium-sized businesses, and large enterprises, as well as government, health, and education customers.

Jefferies Financial

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This broker-dealer is an excellent idea for those looking for financials besides money center banks. It pays a 2.60% dividend. Jefferies Financial Group, Inc. (NYSE: JEF) engages in investment banking capital markets and asset management businesses in the Americas, Europe, the Middle East, Africa, and Asia.

The company operates in four segments:

• Investment Banking and Capital Markets
• Asset Management
• Merchant Banking
• Corporate 

 It provides investment banking, advisory services concerning mergers or acquisitions, restructurings or recapitalizations, private capital advisory transactions, equity and debt underwriting, and corporate lending.

In addition, Jefferies offers

• Financing
• Securities lending and other prime brokerage services
• Equities research and finance
• Wealth management services

In addition, it provides clients with:

• Sales and trading of investment grade corporate bonds, U.S. and European government and agency securities
• Municipal bonds, mortgage-backed and asset-backed securities
• Leveraged loans, consumer loans, high yield and distressed securities
• Emerging markets debt
• Interest rate and credit derivative products
• Foreign exchange trade execution and securitization.

It also manages, invests in, and provides services to various alternative asset management platforms across investment strategies and asset classes.

Kraft Heinz

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Even in bad times, everybody has to eat, and this company always stands to benefit while paying a tremendous 4.38% dividend. The Kraft Heinz Company (NYSE: KHC) was formed via the merger of H.J. Heinz Company and Kraft Foods Group.

The company is a leading global food company with estimated annual revenues of $25 billion from well-known brands such as Kraft, Heinz, Oscar Meyer, and Maxwell House.

Kraft Heinz is North America’s third-largest food and beverage manufacturer, and it derives 76% of its revenues from that market and 24% from International.

The Company’s additional brands include:

• ABC
• Capri Sun
• Classico
• Jell-O
• Kool-Aid
• Lunchables
• Ore-Ida
• Oscar Mayer
• Philadelphia
• Planters
• Plasmon
• Quero
• Weight Watchers
• Smart Ones 
• Velveeta