Warren Buffett Owns 10 High-Yield Dividend Stocks. Here’s the Best of the Bunch.

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Warren Buffet’s corporation, Berkshire Hathaway, has never issued dividends to shareholders during his leadership. This is mainly because Buffet thought he could find more profitable investment opportunities – a decision that proved correct. Over numerous decades, Berkshire’s returns have outperformed the broader S&P 500 index significantly, and many consider Buffet to be the greatest investor of all time.

Buffett and his team of investors have consistently invested in high-dividend stocks, even when these companies do not pay out dividends. They are not deterred by this, and instead seek out companies that are undergoing a turnaround but offer attractive dividends as compensation for the investor’s time. Currently, Berkshire Hathaway holds nine such high-yielding stocks, and we’ve highlighted some of the best ones in this list.

Three are top 20 positions

Among the top 20 equity investments by Berkshire Hathaway, three stand out as potential focus areas due to their attractive dividend returns: Kraft Heinz (KHC), Sirius XM (SIRI), and Chevron (CVX). These companies offer estimated dividend yields of approximately 5.6%, 4.5%, and 4.5% respectively.

It is widely considered that one of Buffett’s less successful investments is Kraft Heinz. Buffett initially purchased a share in Heinz back in 2013, teaming up with the Brazilian private equity firm 3G to acquire the company. Later in 2015, they collaborated again to merge Kraft and Heinz in a deal worth $49 billion.

After that point, the performance of the stock hasn’t been strong, with a decrease of approximately 4.7% this year (as of July 23). Lately, Berkshire Hathaway has relinquished its board positions at Kraft Heinz, leading to rumors that the company might soon split up.

In recent times, Berkshire Hathaway has significantly increased its investment in Sirius, a company notable for owning Sirius XM radio and the Pandora music streaming service. Despite being considered one of the rare legal monopolies, Sirius seems to be facing a prolonged period of recovery following a 30% drop in value over the past year.

In recent years, the American oil and gas giant Chevron has become one of many energy assets that Berkshire Hathaway, led by Warren Buffett, has added to its portfolio. This suggests that Berkshire anticipates an upward trend in oil prices over the long term and may also see energy as a valuable asset with increasing demand in the upcoming decades. Despite a 4% drop in the past year, Chevron stands out as a dividend powerhouse, having increased its payout for 38 consecutive years, making it a shining example of a reliable income-generating investment.

Buffett’s “secret portfolio”

Although the specific other seven high-yielding dividend stocks held by Buffett aren’t visible in Berkshire’s filings, it’s worth noting that Berkshire Hathaway essentially has a hidden investment portfolio through New England Asset Management (NEAM), which isn’t directly controlled by Berkshire. This relationship was established when Berkshire acquired General Re in 1998, a company that had previously purchased NEAM back in 1995.

Listed below are the top seven dividend-paying stocks within the NEAM sector, along with their respective projected dividend rates (as of July 23):

[Stock Name 1] – [Projected Dividend Yield]
[Stock Name 2] – [Projected Dividend Yield]
…
[Stock Name 7] – [Projected Dividend Yield]

  • Golub Capital BDC (GBDC) — 10.2%
  • Ares Capital (ARCC) — 8.4%
  • Pfizer — 6.8%
  • Realty Income (O) — 5.6%
  • Bristol Myers Squibb — 5.2%
  • Campbell’s — 4.8%
  • Lamar Advertising — 5%

You’ll see several recurring topics here. Golub and Ares fall under the category of Business Development Companies (BDCs), which are recognized for providing substantial dividends due to their distinctive nature as regulated investment companies. If these firms distribute at least 90% of their taxable income to shareholders in the form of dividends, they can escape corporate taxes.

As a Real Estate Investment Trust (REIT) similar to Pfizer and Bristol Myers, Realty Income offers the same kind of investment opportunity. Both Pfizer and Bristol Myers belong to the pharmaceutical sector, and they are capable of providing substantial dividends.

The best of the bunch

Despite a relatively low-performing stock over the last five years, I firmly believe that Realty Income stands out among its peers. Particularly when considering income generation, it’s hard to find another contender. Admittedly, some other REITs and Business Development Companies (BDCs) offer higher yields, but their dividend payments can be unpredictable due to fluctuations in their earnings.

From a passionate investor’s perspective, I find Realty Income truly remarkable due to its exceptional track record of consistent performance. This real estate investment trust (REIT) primarily employs a triple-net-lease system, which means it leases out its properties while tenants cover the expenses for maintenance, upgrades, property taxes, and insurance. This arrangement can potentially offer tenants more advantageous terms and greater control over their rental spaces, which is beneficial for businesses as they can tailor these spaces to suit their specific needs.

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I, as an observer, note that Realty Income strategically selects tenants who cater to essential needs, offer affordable prices, and provide necessary services such as 7-Eleven, Dollar General, and Walgreens, among others. Moreover, the company is venturing into sectors showing promising growth, like gaming and data centers. Additionally, they aim to broaden their presence geographically, with a focus on expanding in Europe.

Regarding the dividends, Realty Income is incredibly dependable, making it no surprise that their company motto is “The Monthly Dividend Company.” Since its initial public offering in 1994, Realty Income has consistently raised its quarterly dividend for an impressive 110 consecutive quarters. This dividend growth has occurred at a 4.3% compound annual rate and appears to be highly sustainable.

2024 saw Realty Income distributing approximately $3.13 in dividends per share. This company also produced an Adjusted Funds From Operations (AFFO), similar to the cash flow for REITs, amounting to $4.19 – indicating a surplus in their cash flow resources.

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2025-07-25 11:14