Warren Buffett, the revered billionaire investor and Chairman and CEO of $500 billion holding company Berkshire Hathaway, just released his annual shareholder letter in which he discussed a number of intriguing topics.
Perhaps the most noteworthy one was the revelation that Republican tax cuts contributed $29 billion to Berkshire Hathaway Inc. (NYSE:BRK.A)‘s bottom-line last year. That clearly proved irksome to Buffett, who supported Hillary Clinton during the 2016 Presidential Elections and was not fond of the idea of tax cuts for the wealthy. As Buffett made clear in the letter, the windfall “did not come from anything we accomplished at Berkshire.”
The letter also revealed that Berkshire earned quite a windfall from its collection of dividend stocks as well, though not even close to what the tax cuts “earned” it. The holding company’s huge investments in companies like Apple Inc. (NASDAQ:AAPL) (1.44% annual dividend yield) and Wells Fargo & Co (NYSE:WFC) (2.64%) delivered dividend payments of $3.7 billion to Berkshire last year.
In this article, we’re going to look at three of Warren Buffett’s less heralded stock investments which also contributed dividend payments to Berkshire in 2017. With Buffett being a long-term value investor, these stocks should be of prime interest to anyone looking to add some stable dividend stocks to their portfolios for the foreseeable future.
At Insider Monkey, we track insider trading and hedge fund activity to uncover actionable patterns and profit from them. We track over 600 of the most successful hedge funds ever in our database and identify only their best stock picks. Hedge funds are like many other companies in that they bundle products (in this case, stock picks) together and sell them to customers (investors) as a package deal. That means you get their 73rd-best pick along with their best pick, and who wants to pay exorbitant fees for a fund’s 73rd-best idea when you could instead invest in only their best ideas? Our newest quarterly stock picks were released this month, which investors can gain access to by becoming a subscriber to Insider Monkey’s premium newsletters.
Torchmark Corporation (NYSE:TMK)
How Many Shares Berkshire Owns: 6.35 million
How Much Money Berkshire Has Invested in the Stock: $576 million
Torchmark Corporation (NYSE:TMK) Annual Dividend Yield: 0.69%
Buffett Loves Insurance: The insurance industry has long been a favorite of Buffett’s and this company has long been one of his favorites in the sector. Buffett has been a shareholder of Torchmark, a provider of health and life insurance, since late-1999, buying in during the dot-com boom when companies like Torchmark were being punished by the markets for being “old-economy” companies. Buffett knows the insurance industry as well as anyone and has previously referred to it as Berkshire’s most important sector, so when he likes an insurance company, chances are it’s doing something (or a lot) right.
Share Buybacks to Slow, Dividends to Rise?: Torchmark Corporation (NYSE:TMK) has aggressively repurchased shares in recent years to boost its stock price, but with interest rates rising, it’s expected that share buybacks will begin to slow in the coming years. That, in conjunction with Torchmark’s elevated stock price, could lead the company to begin hiking its dividend payments as a more effective means of returning cash to shareholders.
On the next page we’ll look at two more cheap dividend stocks that the greatest investor of all time loves.