Unlike the ups and downs of equity gains, dividends afford investors a fully realized gain on a timely basis. Moreover, the most successful companies grow their dividends over time, meaning the returns compound the longer you own the stock.
Perhaps most important of all, during the times we find ourselves in, is that dividend stock investors benefit somewhat from a downturn in the market. While the share price goes down, the dividends typically remain the same, making a dividend reinvestment strategy particularly lucrative; the lower share price allows for more shares to be purchased with the dividend reinvestment.
The Oracle of Omaha, aka Warren Buffett, knows the value of dividend-paying stocks. Buffett’s company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), owns many dividend payers. Here are the four highest payers in his portfolio.
One of the world’s largest banks, Citigroup, operates in over 100 countries. Berkshire Hathaway owns 55 million shares, good for 2.8% of the float; the shares make up 0.8% of Berkshire’s overall portfolio. The company’s annual dividend is currently $2.04, good for a dividend yield of 4.08%.
Citigroup is currently trading at $51.72 per share, up +1.92% on the day. YTD, C stock is down –18.03%.
Kraft Heinz has been in the news recently due to their affiliation with the Pittsburgh Steelers’ stadium. The stadium was called Heinz field for over two decades. The loss of the stadium should have minimal effect on the company, which is still the 3rd largest food producer in North America. Berkshire owns 326 million shares, which account for 26.6% of shares outstanding and makeup 3.9% of Berkshire’s portfolio. The annual dividend of $1.60 works out to a yield of 4.2%.
Kraft Heinz last traded at $37.34 per share, up +0.67% on the day. YTD, KHC stock is up +3.32%.
REITs have historically been one of the most reliable and successful investment options, so, unsurprisingly, Buffett includes them in his portfolio. Store Capital is one of the fastest-growing net-lease REITs in the industry. The company owns a wide variety of real estate, including fast food restaurants, manufacturing facilities, car dealerships and specialized medical facilities. With nearly 15 million shares, Berkshire Hathaway owns 5.3% of the shares outstanding, accounting for 0.1% of its overall portfolio. The $1.54 yearly dividend returns 5.7%.
Store Capital closed trading today at $28.48 per share, down -0.73% on the day. YTD, STOR stock is down -17.69%.
The largest wireless carrier in the U.S. with over 115 phone customers, Verizon Communications Inc. also offers in-home cable internet and phone service on the east coast, with operations beginning to expand to the west coast. Berkshire recently sold off the majority of its Verizon stake but still holds 1.3 million shares. The remaining shares will pay an annual dividend of $2.56, good for an attractive 5% dividend yield.
Verizon closed trading today at $45.33 per share, even on the day. YTD, VZ stock is down -13.56%.
* Attention readers on mobile or tablet, if you cannot view the above chart in its entirety, please rotate your device sideways. Make sure you have your portrait orientation lock switched off.
Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.