Warren Buffett has made a name for himself by snatching up companies at deep discounts and holding until he’s captured as much value as possible. Anyone familiar with the famed investor knows that he is more apt to buy and hold versus making swift trades; he even advocated the exchanges being open only once per quarter (as opposed to daily) for traders to buy and sell.
With that in mind, we’ve analyzed his list of holdings to see which of his longer-term positions have netted him serious gains in dividends on their path to reaching his valuations. We define “long-term” as an investment horizon that is a year or greater. Our research has shown that famed investors and hedge funds are very good at picking stocks. For example, the most popular small-cap stocks among hedge funds beat the S&P 500 index by 18 percentage points per year (see the details). In this article we took a look at some of Buffett’s highest yielding dividend stocks that he’s seen fit to keep around in his portfolio.
One of his highest-producing positions comes in the form of pharmaceutical giant GlaxoSmithKline plc (ADR) (NYSE:GSK). The stock traded sideways for most of 2012, finding difficulty gaining upward momentum due to consistent minor earnings misses and subsequent downgrades. However, despite the relatively flat performance in the past year, Buffett was able to pocket the four quarterly dividends, giving him a total yield of 5.1%. He kept his activity in the stock non-existent, opting to sit on his 1.5 million shares and not add to or take away from the position. GSK’s next ex-dividend is on the twentieth of this month, giving an investor plenty of time to “be like Buffett” and go long before this next dividend passes him by. Fellow billionaire Ken Fisher has nearly 8 times the position that the Omaha investor does (see the rest of his top holdings here).
ConocoPhillips (NYSE:COP) used to be a $2+ billion position for Berkshire Hathaway Inc. (NYSE:BRK.A), but a declining stock price plus a 4 million share divestment brought on a roughly one-third drop in total value from Q3 2011 to Q3 2012. The global oil concern saw a significant plummet in valuation in May 2012 after spinning off the downstream portion of its operations to Phillips 66 and has been on a mission to rebuild value since. Despite the split, COP continued to pay out a dividend of $0.66 a quarter, creating a total dividend yield of 4.6%. As long as the company places an importance on growth and can maneuver potentially negative changes in commodity prices, we see upside in the play, just as Buffett still does. David Dreman of Dreman Value Management joined Buffett by selling some of his position towards the end of 2012.