54.7% of Warren Buffett's $363 Billion Berkshire Hathaway Portfolio Is in These 2 Dividend Stocks

Berkshire Hathway CEO Warren Buffett once remarked, "If you don't find a way to make money while you sleep, you will work until you die." Even taking a quick glance at the investment conglomerate's stock portfolio reveals that owning high-quality dividend stocks is one of Buffett's favorite ways to make money while catching some shuteye.

While Berkshire Hathaway itself doesn't pay a dividend, the company's 10 largest stock holdings return value to shareholders in the form of regular cash payments. Perhaps even more striking, the large majority of Buffett's company's total stock holdings are concentrated in just a handful of dividend-paying stocks. With that in mind, read on for a look at two dividend stocks that currently account for 54.7% of Berkshire's stock portfolio.

Buffett has placed a huge amount of faith in Apple

Keith Noonan: Berkshire Hathaway first started buying shares of Apple (NASDAQ: AAPL) stock in the first quarter of 2016. The tech giant quickly became one of Buffett's favorite companies, and it occupies a unique position in his company's portfolio.

Apple stands as the investment conglomerate's single largest stock holding -- and by an almost incredible margin. Based on data supplied in Berkshire's most recent public portfolio disclosure, Apple alone accounts for roughly 48.2% of Berkshire's stock holdings. For comparison, Bank of America is the Berkshire's second-largest stock position and accounts for roughly 8.8% of the investment giant's holdings.

Even though Apple's yield is relatively small, the company is actually one of Berkshire's biggest sources of dividend income. Today, the iPhone company's stock yields just 0.5%. Yet Berkshire's massive investment position means that Apple stock is still a huge source of dividend income for Buffett's investment conglomerate.

Berkshire owns more than 915.5 million shares of Apple stock. With the stock paying an annual dividend of $0.96 per share, Buffett's company will receive roughly $880 million in payments just for owning Apple over the next year even if the company doesn't raise its payout. But there's a very good chance that Apple will keep its streak of dividend payout growth alive.

AAPL Dividend Chart

AAPL Dividend data by YCharts

The tech titan has raised its annual dividend each year since initiating a payout in 2012. Since Buffett's company began buying shares, Apple has increased its dividend roughly 85%.

Apple's most recent payout increase arrived this past May, with the company hiking its quarterly payout 4% to $0.24 per share. Thanks to the immense profitability of its business, there's a very good chance the tech leader will continue delivering regular payout increases. That means the Oracle of Omaha, and other investors, will see rising yield on Apple shares they've already purchased.

A tasty beverage stock for The Oracle of Omaha

Parkev Tatevosian: Buffett owns a whopping 400 million shares of Coca-Cola (NYSE: KO) stock. It's not hard to see why. For roughly a century, the beverage giant has delivered tasty drinks that consumers love. That has built brand loyalty, which is undoubtedly something Buffett appreciates in an investment, as it makes it harder for rivals to steal your customers.

Indeed, Coca-Cola's brand loyalty helped it generate $43 billion in revenue in 2022 and $12 billion in operating profitability. The healthy profit supported Coca-Cola's dividend per share of $1.76 in 2022. That figure has grown from $1.12 per share in 2013. Like a household, a company can't pay a dividend per share above its earnings per share for very long. If it does, it will soon run out of savings and exhaust its borrowing capacity.

KO Normalized Diluted EPS (TTM) Chart

KO Normalized Diluted EPS (TTM) data by YCharts

For that reason, Buffett is probably reassured by Coca-Cola's consistent earnings per share, which is usually more than its dividend per share, suggesting a sustainable dividend for years to come. Looking at Coca-Cola's financial metrics makes it clear why The Oracle of Omaha owns 400 million of the beverage giant's shares.

It might not be a bad idea to consider adding shares of Coca-Cola to your portfolios. If you hold those shares for a decade or more, you will be wealthier than when you started.

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Keith Noonan has no position in any of the stocks mentioned. Parkev Tatevosian, CFA has positions in Apple. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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