- Stock Market News, Stock Advice & Trading Tips
Warren Buffett needs no introduction as arguably the world's
Pete Souza via Wikimedia (Modified)
Berkshire Hathaway Inc.
) portfolio valued at
more than $130 billion
, Buffett has more than proven his ability to successfully pick the
best blue-chip stocks.
However, many investors don't realize that the majority of
Warren Buffett's stock picks pay dividends, including nine of his
10 largest positions.
Even better, almost a third of
Warren Buffett's dividend stocks
offer a high-yield dividend in excess of 3%.
We studied each of Buffett's high-yield
and identified the three that offer the most reliable payments.
Here they are, in order of yield:
Buffett's Safest Dividend Stocks: Coca-Cola (KO)
Chris Nielsen via Flickr
KO Dividend Yield:
The Coca-Cola Co
) has raised its dividend for more than 50 consecutive years
and is a member of both the
dividend kings lists
As the world's largest beverage company, Coca-Cola boasts more
than 20 brands with at least $1 billion in sales each.
Altogether, Coke has more than 500 sparkling and still beverage
brands. The business is also very diverse geographically with
about 50% of its total case volume coming from Latin America and
Warren Buffett began buying shares of Coca-Cola in 1988, shortly
after shares plunged amid the market crash of 1987. Berkshire
Hathaway was likely attracted to the company's strong brands that
had been built up over many decades of time and billions of dollars
in marketing and advertising expenditures.
Coca-Cola's distribution platform is also very impressive. As
consumer incomes rise in international and emerging markets,
consumption of Coke's products should rise to support long-term
Coca-Cola's shares are a bit expensive at the moment at just
under 22 times earnings, but KO offers a lot in the way of dividend
stability and staying power.
Buffett's Safest Dividend Stocks: Wells Fargo (WFC)
Mike Mozart via Flickr (Modified)
WFC Dividend Yield:
Wells Fargo & Co
) is Warren Buffett's biggest holding and accounted for close to
20% of Berkshire Hathaway's portfolio at the end of 2015.
Buffett's stake in Wells Fargo was initiated in 1989 when
investors were pessimistic about bank stocks. At the time, Buffett
praised the managing prowess and conservatism of the company's
executives and culture. Since then, he has
raised his stake to nearly 10%
WFC is generally thought to be the highest quality major bank in
the country and operates approximately 90 diverse business lines
across areas such as mortgage lending, investments, insurance, and
consumer and commercial finance services.
Importantly, Wells Fargo mostly stays away from investment
banking and trading activities, which are thought to carry a higher
risk profile than most of its other financial services.
As the third-largest bank in the country by assets, Wells Fargo
enjoys meaningful cost advantages over its smaller peers because it
can better leverage its expenses.
The bank's lending operations, which accounted for just over
half of its total sales last year, also benefit from having more
retail deposits than any other bank in the country. Deposits
help fund the loans Wells Fargo makes and cost the bank very little
to maintain, ensuring it earns a positive spread even in today's
low interest rate environment.
Wells Fargo trades at less than 11 times earnings, and should
interest rates begin to rise, WFC stock should do well.
Buffett's Safest Dividend Stocks: Verizon (VZ)
Mike Mozart Via Flickr
VZ Dividend Yield:
Verizon Communications Inc.
) has rewarded shareholders with higher dividends for 11
consecutive years and operates in one of
the best stock sectors for dividends
Verizon is the largest provider of wireless services in the
country, and its 4G LTE network reaches more than 98% of America's
Almost all of Verizon's operating profit is accounted for by its
wireless operations, which consist of voice and data services and
equipment sales. Over 112 million retail connections depend on
Verizon for their communication needs, and the company generated
sales in excess of $91 billion last fiscal year.
Warren Buffett began buying shares of VZ during the first
quarter of 2014, and the company currently represents about 1.3% of
Berkshire Hathaway's portfolio.
Like many of Buffett's stock picks, Verizon benefits from strong
brand recognition, owns hard-to-replicate assets, sells essential
services and maintains a dominate market share.
Verizon's industry-leading wireless network cost billions of
dollars to build, and the company is able to spread its costs over
a larger pool of subscribers than its rivals to generate healthy
profits. Consumers and businesses also need Verizon's services
regardless of how the economy is doing, creating inelastic demand
for the company's offerings.
These are some of the main factors that have helped Verizon
generate consistent free cash flow and deliver decent returns on
Shares of VZ trade at less than 13 times forward earnings
As of this writing, Simply Safe Dividends was long WFC and
Warren Buffett's 3 Safest Dividend Stocks Yielding
3% or More
appeared first on