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4 Warren Buffett High-Yield Dividend Stocks Are Poised to Go Higher With Trump in Office
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Key Points
- Donald Trump’s presidential win is being considered the biggest political comeback ever.
- Energy and financials will benefit from less regulation.
- Quality dividend stocks will benefit from lower interest rates.
- With Trump’s win, it may be time for a portfolio check-up with an experienced financial advisor. Click here to get started finding one.
If any investor has stood the test of time, it’s Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world, and his annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors.
Known for his long buy-and-hold strategies and massive portfolio of public and private holdings, he remains one of the world’s preeminent investors. With interest rates poised to move lower, adding Buffett dividend-paying stocks that will rally as bond yields drop makes sense.
With a stunning victory and a seemingly massive mandate via electoral and popular vote, Wall Street is already handicapping the sectors that will benefit from a reduction in onerous and expensive overregulation. Almost everybody agrees that energy and the financial sectors will be among the biggest beneficiaries of Trump’s second term.
We screened Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) portfolio for stocks in those two sectors and found four that are reasonably priced, pay among the biggest dividends, and are outstanding stocks to buy now, with the S&P 500 and the other major indices trading at nosebleed price-to-earnings multiples. All four are rated Buy by the top Wall Street firms we cover.
Why do we cover Warren Buffett stocks?
There are few investors with the results and the reputation Mr. Buffett has garnered over the past 50 years, and while investing has changed over the previous half-century, buying good companies with products and services that are known worldwide while paying dividends will always stay in style.
Ally Financial
The bank with no buildings posted solid third-quarter earnings and offers a solid 3.27% dividend. Ally Financial Inc. (NYSE: ALLY), a pioneer in the digital financial services industry, provides a diverse range of innovative digital financial products and services to consumer, commercial, and corporate customers, primarily in the United States and Canada.
It operates through four segments:
- Automotive Finance Operations
- Insurance Operations
- Mortgage Finance Operations
- Corporate Finance Operations
The Automotive Finance Operations segment offers:
- Automotive financing services, including retail installment sales contracts
- Loans and operating leases
- Term loans to dealers
- Financing dealer floor plans and other lines of credit to dealers
- Warehouse lines to automotive retailers
- Fleet financing
It also provides financing to companies and municipalities to purchase or lease vehicles and vehicle remarketing services.
The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.
The Mortgage Finance Operations segment manages a consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans from third parties and direct-to-consumer mortgage offerings.
The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies and leveraged loans and commercial real estate products to serve companies in the healthcare industry.
The company also offers commercial banking products and services, securities brokerage, and investment advisory services.
Chevron
This integrated giant is a safer option for investors looking to position themselves in the energy sector and pays a rich 4.20% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. The company operates in two segments.
The Upstream segment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines
- Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum products
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives.
Chevron announced over a year ago that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.
Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’ Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal will ultimately be completed, and Chevron will emerge even more powerful in the energy sector.
This is one of just two energy holdings in Berkshire Hathaway, which holds over 118 million shares of the integrated giant.
Citigroup
This is a top money center bank, and Warren Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.16% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.
Citigroup offers:
- Consumer banking and credit
- Corporate and investment banking
- Securities brokerage
- Transaction services
- Wealth management services
Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).
Trading at a reasonable 9.2 times estimated 2025 earnings; this company looks very sensible in a volatile stock market and in a sector that has lagged some in 2024 but looks to be gaining ground.
Occidental Petroleum
Over the past two years, Berkshire Hathaway has been buying the shares in a big way, which now amounts to a massive 255,281,524 shares that pay a decent 1.75% dividend. Occidental Petroleum Corp. (NYSE: OXY) engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, Africa, and Latin America.
It operates through three segments:
- Oil and Gas
- Chemical
- Midstream and Marketing
The company’s Oil and Gas segment explores, develops, and produces oil and condensate, natural gas liquids (NGLs), and natural gas.
Its Chemical segment manufactures and markets basic chemicals, including:
- Chlorine
- Caustic soda
- Chlorinated organics
- Potassium chemicals
- Ethylene dichloride
- Chlorinated isocyanurates
- Sodium silicates, and calcium chloride
- Vinyls comprising vinyl chloride monomer, polyvinyl chloride, and ethylene
The Midstream and Marketing segment gathers, processes, transports, stores, purchases, and markets oil, condensate, NGLs, natural gas, carbon dioxide, and power. This segment trades around its assets, including transportation and storage capacity, and invests in entities.
Buffett has loaded the boat on Occidental Petroleum, which pays Berkshire Hathaway a reported annual dividend of $903,847,747. This includes $224,647,747 from the common stock and $679,200,000 from a $10 billion position of Occidental preferred stock, which yields 8%.
In addition, he owns warrants to buy an additional 83.9 million shares for $5 billion, which translates to $59.62 per share.
Back in June, Buffett bought company shares for nine straight days, upping his stake to an astounding 28.8%. Reportedly, from June 5 on he acquired an additional 7.3 million company shares at prices around the $60 level for the next nine trading days.
Occidental Petroleum is Berkshire Hathaway’s sixth-largest holding, and it is by far the largest institutional investor in the company.
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