As of this time, Warren Buffett believes that Berkshire Hathaway should not pay a dividend and retain its earnings instead. The company feels it could put this money to better use, and shareholders will often benefit more by having Berkshire invest its money in stable companies as opposed to paying any an attractive dividend.
But let’s take a look at some of Buffett approved stocks that pay dividends. These companies are very strong and it doesn’t seem like they will falter or fail anytime soon.
Walmart – as the world’s largest retailer, it also happens to be one of the biggest positions in the Berkshire Hathaway portfolio. At the end of the first quarter of 2013, they had nearly $4 billion invested in the company. Walmart pays a dividend of 2.5%, and shares have gone up nearly 10% in 2013 as of this date. The company’s payout ratio – they percentage of earnings paid out to shareholders as dividends – is currently at 33%.
Coca-Cola – this is a Georgia-based company in the beverage industry, and it’s no secret that’s it’s one of Warren Buffett’s favorite stocks to own. Recently in an interview, Buffett said “We’ve never sold a share, and I wouldn’t think of selling a share.” Coca-Cola’s current dividend is 2.8%. At the time of this writing, Coca-Cola shares have risen 11.3% in 2013. The payout ratio of the company is 55%.
Wells Fargo – this banking conglomerate was founded in 1852, and as far as equity positions go, it is the largest in the Berkshire Hathaway portfolio. By the end of the first quarter of 2013, Berkshire Hathaway owned over $18 billion worth of shares. Wells Fargo pays a 3% dividend to shareholders, and at the time of writing this article, Wells Fargo shares have risen a total of 17% in 2013. The payout ratio for the company is 26%.
Procter & Gamble – the company was originally founded in 1837 and it has grown into a consumer giant. At this time, P&G pays out a very attractive dividend at 3.1%. Shares have risen 15% in value so far in 2013, and the total payout ratio for the company is 50%. By the end of the first quarter in 2013, Buffett and Berkshire Hathaway owned a total of $4.26 billion worth of Procter & Gamble shares.
ConocoPhillips – this is currently the biggest independent energy exploration company, and they pay a whopping 4.3% dividend. As of the time of this writing, shares have risen 5.2% in 2013. Berkshire Hathaway currently owns $1.51 billion worth of shares and the payout ratio for the company is 43%.
If you are an investor with a focus on capital gains, Phillips 66 is another attractive spinoff venture that you may want to consider. They Phillips 66 shares have risen by over 20% this year, and they pay a 2% dividend yield. Berkshire Hathaway owns a $1.76 billion stake in Phillips 66 as of the first quarter of 2013.