Warren Buffett (Trades, Portfolio) has said that he never expects Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) to pay a dividend, at least while he's around. That rule hardly applies to Buffett's own investments however.
Over the last 50 years, Berkshire Hathaway stock has compounded book value by nearly 20% annually, almost always beating the market by big strides over any multi-year period. And while Buffett isn't too fond of dividends—he'd rather the companies reinvest that money if returns are high—a big part of his success has come from dividend stocks.
Here are his 5 current holdings sorted by their biggest dividend yields.
General Motors Company (GM, Financial)
GM stock has been doing well lately backed by optimism sorrounding its Chevy Bolt, the company's supposed Tesla (TSLA, Financial) killer. The Chevy Bolt will cost about $158 per mile of driving range, according to a breakdown by Bloomberg. That mark compares very favorably to the EV models out on the road, which vary from a low of $294 for the Tesla Model S to $523 for the BMW i3 on the high side. The Tesla Model 3 cost/range mile is estimated at $163.
1.1% of Berkshire's portfolio
4.8% dividend
With wireless subscription growth slowing overall, both T-Mobile (TMUS, Financial) and Sprint (S, Financial) claim to be stealing Verizon's customers. Although the company is a bluechip in the industry, fierce competition and an ongoing price war have taken a toll on the company's earnings. The smartphone market has also become saturated.
0.7% of Berkshire's portfolio
4.5% dividend
International Business Machines Corp (IBM, Financial)
IBM has been a fairly good long-term investment as the company has an extended history of success, with a proven ability to continually reinvent itself in the face of decline. Lately, it seems to be stuck in a decline phase. The stock has lagged the market considerably, down 11.4% over the past 5 years versus an S&P500 (SPY) return of 99.3%.
9.5% of Berkshire's portfolio
3.6% dividend
A long-time holding, the bank's shares are down recently after an account opening scandal which may lead to criminal prosecutions and lawsuits. Wall Street analysts don't appear to know what to make of this. Baird and Morgan Stanley (MS, Financial) both say to buy the dip, while others like JPMorgan (JPM, Financial) are more cautious. Buffett appears to be holding pat.
17.5% of Berkshire's portfolio
3.3% dividend
Buffett keeps buying this energy liquids refiner. In September, Buffett bought another 1 million shares, raising his stake in the refiner to 15.4%. Refining margins are up of late and the industry faces favorable upcoming supply/demand conditions. Falling oil prices should help refining margins even more.
4.8% of Berkshire's portfolio
3.1% dividend
Disclosure: I have no positions in any of the stocks mentioned above and no intention to initiate a position in the next 72 hours.
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