Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial), one of the largest holding companies in the world, has stakes in companies belonging to various sectors and industries. Its founder and chairman, the great investment genius, Warren Buffet, along with his able and talented top management team, has always given priority to dividend stocks when it comes to buying stakes in companies. Most of the stocks that feature in the portfolio of Berkshire Hathaway are the best in their respective industries as far as dividends are concerned. Let us look at some of the best dividend stocks amongst the hundreds of stocks that Berkshire Hathaway has invested in.
Customer confidence and capacity to sustain in the highly competitive industry
One of the best dividend stocks in the portfolio of Berkshire Hathaway is Verizon Communications (VZ, Financial), the telecom giant. With a 4.5% dividend yield, it is no wonder that this company has found a mention in this list. Last year was quite promising for the company as its adjusted earnings per share, device activation rates and customers subscribing to its FiOS internet services increased by 18%, 34% and 9%, respectively. There are many telecom companies in the stock market currently, but Verizon has beaten them all and emerged No. 1 in the wireless market industry.
When compared with its peers, AT&T (T, Financial), Sprint (S, Financial) and T-Mobile (TMUS, Financial), Verizon is the best when it comes to the quarterly average revenue per user. This should be more than enough reason as to why Verizon is one of Berkshire’s best dividend stocks.
Lesser exposure to risk and reasonable dividends
It is rather strange that a stock from the shaky banking sector has figured in the list of best dividend stocks in Warren Buffet’s portfolio. However with a bank like Wells Fargo (WFC, Financial) that pays its investors quite well and that is exposed to as little risks as possible, this does not sound as surprising as it should. This is because this bank is known for its discipline in banking operations and for its sensible tactics. Though the bank’s dividend yield would touch 2.7% very soon, it is not the only reason why this bank is chosen as one of the best from Berkshire’s portfolio. The efficiency ratio, which is nothing but the component of cost incurred for every single dollar of revenue earned stood at an impressive 58.1%, whereas this ratio stood at 62.7% for the entire banking industry. This clearly shows that Wells Fargo is indeed a leader when it comes to cost management. Due to this ratio, the bank could save up to $3.9 billion in pre-tax bottom line margins for 2014.Â
The bank has tasted good success in its other operations like loans for vehicles and credit cards. Loans for automobiles touched the phenomenal figure of $6.7 billion during Q4 2014. The number of customers who subscribed Wells Fargo credit cards increased by 37% in 2014. With many more successful initiatives lined up for the coming years, Wells Fargo is staring at quite a bright future that is going to be absolutely investor-friendly.
Conclusion
The stock market is full of dividend stocks that aim to increase shareholders’ worth by a great extent in the future. If you are unsure to choose your picks among them, you can refer to the above stocks as these have been trusted by the great investment guru Warren Buffet himself. His company, Berkshire Hathaway invests only in top dividend companies. Therefore, going through Berkshire’s portfolio will give you a fair idea on where and how much to invest your hard-earned money in.
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