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Billionaire Warren Buffett’s Top Dividend-Paying Stock Picks

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Billionaire Warren Buffett is considered one of the greatest value investors of our time, which is why Berkshire Hathaway‘s equity portfolio contains in majority positions in companies that have a long history of strong performance, most of which have been held by Berkshire for decades. Buffett and his team prefer to invest in companies that have strong fundamentals and a sound financial position, which, aside from long-term share price growth, allow the investor to benefit from a significant inflow of cash from dividend payments. On Monday, Berkshire filed its 13F filing for the end of March, the highlights from which we have discussed earlier. In this article, let’s take a closer look at the best dividend-paying stocks from Berkshire Hathaway’s equity portfolio.

Berkshire Hathaway is one of over 760 smart money investors, whose equity portfolios we track as part of our small-cap strategy. Research has shown that, despite the delay between the end of a quarter and the filing of the 13F, smaller investors can still benefit from imitating some of the positions that hedge funds and other institutional investors are bullish on. Our strategy is focused on identifying the best small-cap stocks that the funds in our database are collectively bullish on (see more details here).

Warren Buffett
Warren Buffett
Berkshire Hathaway

Wells Fargo & Co (NYSE:WFC) represented Berkshire’s second-largest equity position, which contained 479.70 million shares worth $23.20 billion at the end of March. The stock has declined by around 10% year-to-date and currently sports a dividend yield of 3.12%, based on the company’s $0.38 quarterly dividend. In April, Wells Fargo & Co (NYSE:WFC) upped the dividend by just 1%, which disappointed investors, who were expecting a more significant raise, similar to last year, when the bank increased the dividend by 7%. However, the company added that it had submitted its 2016 Capital plan to be reviewed by the Federal Reserve and once it will be completed, Wells Fargo might further increase the dividend. Aside from Berkshire Hathaway, other shareholders of Wells Fargo & Co (NYSE:WFC) include Alex Snow’s Lansdowne Partners and Ken Fisher’s Fisher Asset Management. During the first quarter, Lansdowne Partners boosted its position by more than 108% to 20.48 million shares, while Fisher Asset Management inched up its position by 1% to 19.10 million shares.

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On the third spot in Berkshire’s equity portfolio is The Coca-Cola Co (NYSE:KO), which the fund reported an $18.56 billion stake containing 400.0 million shares. In a recent interview on CNBC, Buffett defended Coca-Cola’s products, saying that he drinks five cans of Coke a day and he is “happy and enjoys life”. He added that the ‘sugar tax’ on soft drinks is “illogical”, because it doesn’t affect other high-sugar products. However, Buffett also mentioned that The Coca-Cola Co (NYSE:KO) is not one of the investments that he would never sell. Meanwhile, The Coca-Cola’s stock sports a dividend yield of 3.19%, higher than the industry average of 2.6%. Earlier this month, DividendChannel included The Coca-Cola Co (NYSE:KO) in its ”S.A.F.E. 25” list of stocks, highlighting the high dividend yield and a strong track record of dividend growth. Donald Yacktman’s Yacktman Asset Management is another shareholder of Coca-Cola, owning 18.29 million shares, according to its latest 13F filing.

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On the next page, we are going to discuss the other three dividend stocks from Berkshire’s equity portfolio.

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