Berkshire Hathaway (NYSE:BRK-B | BRK-B Price Prediction) CEO Warren Buffett likes to collect income from stocks representing solid businesses, and who could blame him? The Oracle of Omaha’s ability to pick great dividend stocks is legendary, and it’s not a terrible idea to mimic some of his investments.
Sure, Buffett allows for a measure of diversification in Berkshire Hathaway’s portfolio. That said, it’s noteworthy that three dividend giants collectively make up a whopping 20% of Berkshire’s holdings.
That fact speaks volumes about Buffett’s commitment to delivering shareholder value and income to Berkshire Hathaway’s investors. It also says a lot about his strong belief in three particular companies, so let’s take a closer look at these major dividend-yielding Buffett picks.
Coca-Cola
Buffett’s devotees probably expected to see Coca-Cola (NYSE:KO) on this list. The Berkshire chief executive is known for drinking Coca-Cola soda and for staying continuously invested in KO stock.
To say that Buffett believes in Coca-Cola as a business would be a serious understatement. Believe it or not, Berkshire Hathaway’s Form 13F filing from February 14 reveals that the company had 400 million Coca-Cola shares; moreover, those KO shares comprised 10.5% of Berkshire’s total portfolio.
Coca-Cola stock is a “slow and steady wins the race” type of asset, but that’s perfectly fine with a long-term investor like Buffett. KO stock probably won’t make you fabulously wealthy overnight, but the company is rock-solid in all the right ways.
Financially speaking, Coca-Cola delivered decent growth in 2024. The company’s net revenue rose 3% year over year to $47.1 billion, and Coca-Cola’s adjusted (non-GAAP) earnings increased 7% to $2.88 per share.
These data points are relevant because Coca-Cola’s revenue and earnings growth indicate that the company can continue to pay dividends to the shareholders. Indeed, not only can Coca-Cola pay dividends, but the company is committed to growing those dividends.
Impressively, Coca-Cola has increased its dividend distributions (in dollar terms, not yield percentages) during each of the past 62 years. Currently, Coca-Cola offers a forward annual dividend yield of nearly 3%; for Buffett and other KO stockholders, those ultra-consistent cash payments can certainly leave a pleasant aftertaste.
Occidental Petroleum
Another Buffett fave is energy giant Occidental Petroleum (NYSE:OXY). You may have heard about Berkshire Hathaway gobbling up shares of OXY stock; Buffett isn’t just a shareholder; he’s a share hoarder.
To quantify this, a regulatory filing reveals that Berkshire held nearly 265 million shares of Occidental Petroleum. All told, these OXY shares comprise 4% of Berkshire Hathaway’s portfolio holdings.
It’s no secret that Buffett is a value investor, and Occidental Petroleum seems to check the good-value box. With a trailing 12-month (TTM) price-to-earnings (P/E) ratio of 17.8x, Occidental Petroleum appears to trade at a reasonable valuation multiple.
Yet, Buffett wouldn’t consider OXY stock a bargain unless the energy producer is also a profitable company. As it turns out, Occidental Petroleum reported $3.078 billion in net income in 2024, bolstered by $21.705 billion worth of net oil and gas sales.
Besides, Occidental Petroleum truly embodies the spirit of “drill, baby, drill.” In 2024, the company ramped up its total production pace by 9% year over year to 1.327 million barrels of oil equivalent per day. That’s a rapid ramp-up, and another reason for Buffett to invest in Occidental Petroleum, which provides an energetic 2.37% forward annual dividend yield.
Kraft Heinz
How about some macaroni and cheese with that Coca-Cola? Evidently Buffett likes to invest in food stocks, as Berkshire Hathaway owns a stake in packaged foods producer Kraft Heinz (NASDAQ:KHC).
In terms of value and yield, Kraft Heinz is hard to beat. This helps to explain why Buffett’s company recently held 325.6 million KHC shares, comprising 3.5% of Berkshire’s portfolio.
For what it’s worth, Kraft Heinz disclosed slight year-on-year adjusted operating income growth in 2024 in North America and international developed markets. That’s all well and good, but it’s Kraft Heinz’s valuation and dividend stats that should really appeal to Buffett aficionados.
For value seekers, Kraft Heinz’s TTM P/E ratio of 12.88x suggests that a prime bargain is available for the taking. Meanwhile, income investors should be pleased to learn that Kraft Heinz offers a delicious 5.39% forward annual dividend yield.
Like Coca-Cola stock, Kraft Heinz stock is a “steady Eddie” kind of investment. It won’t appeal to thrill chasers, but KHC stock can help you build wealth over time through consistent dividend distributions.
Occidental Petroleum stock is prone to bigger price moves, but like the other two Berkshire Hathaway holdings mentioned today, it’s a reliable income earner. So now, it makes perfect sense that Buffett’s business is heavily invested in these three dividend giants — and you can try these stock picks if you’re ready to build your own Berkshire-like portfolio.
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