9 Warren Buffett-Approved Dividend Stocks

Although his Berkshire Hathaway (NYSE: BRK-B  ) (NYSE: BRK-A  )  shareholders don't receive a cash payout, Warren Buffett loves investing in dividend stocks.

Investing in stocks that provide a stable, high dividend can secure your financial future with steady cash flow. The Berkshire portfolio is the perfect place for individual investors to research high-yield dividend stocks for potential investments. Here are the top nine.

1. ConocoPhillips
With a trailing 12-month dividend yield of 3.72%, ConocoPhillips sits comfortably at the top of the Berkshire dividend stocks list. Though Buffett's team has been steadily reducing its position in ConocoPhillips, the company is one of the best dividend payers in the energy sector -- with its closest dividend competitor, Chevron, falling short with a (still impressive) 3.22% yield. Though ConocoPhillip's share price is near a five-year high, the dividend payout remains strong enough to provide Berkshire (and other investors) with it's top payout.

2. Kraft Foods
Coming in just below ConocoPhillips, Kraft Foods is no slouch with a 3.69% yield. Though Kraft represents one of Berkshire Hathaway's smaller holdings, the food and beverage producer outpaces many of the other companies within its industry.

Though Kraft Foods has a short history of dividend payments, it began distributing one to shareholders shortly after its IPO in October 2012, with an increase from the initial $0.50 dividend to $0.525 just three quarters later.

3. Sanofi
The French pharmaceutical company currently dominates the estimated $1 billion market for chronic kidney disease treatments, though a new generic drug has been recently approved for market.

Nevertheless, Buffett and his team hold 3.9 million shares in the pharma firm, which provides investors with a 3.65% dividend yield. Though there are some competitors within the pharmaceutical industry that pay higher yields, Sanofi still presents a fine option for investors looking for solid payouts, year in and year out.

Photo: GM

4. General Motors
With its newly reinstated dividend, General Motors is back in the fold with a solid 3.53% trailing 12-month yield. Berkshire Hathaway increased its position in GM by 15 million shares in late 2013, with the current position holding at 40 million shares.

Investors interested in the auto industry may be a bit weary of the Detroit carmaker due to the recent recall debacle, but keep in mind that the manufacturer has made huge strides in its recovery from near collapse, and provides the biggest yield for investors in American auto stocks.

5. General Electric
The conglomerate enjoyed a boost in its shares held by Berkshire Hathaway at the end of 2013, ending at the 10.58 million-share mark. With a dividend yield of 3.31%, Buffett and his team have bolstered Berkshire's dividend income by buying up more GE shares. Though the current $0.22 per-share dividend still falls short of the pre-recession payouts of $0.31 from GE, investors can be sure that the steady increases since 2009 will likely continue as GE aims to shrink parts of GE Capital -- the unit that burned the company during the recession.

6. Procter & Gamble
With a 3.16% yield, Procter & Gamble continues to provide investors with a steady cash flow. Berkshire Hathaway maintains a nearly 53 million share position in the personal products company, though the holding was significantly reduced in 2012 from 96.3 million shares.

Procter & Gamble is among the exclusive group of S&P 500 stocks known as dividend aristocrats -- meaning that the company has increased its dividend payments for the past 25 years.

7. Coca-Cola
The beverage giant falls just below the 3% mark, with a 2.99% trailing 12-month yield. One of Berkshire's largest positions, the beverage giant's 400 million shares are airtight in Omaha. Like Procter & Gamble, Coca-Cola is a dividend aristocrat, with its increases starting all the way back in 1963. Though it may be closer to the bottom of this list of Buffett-approved dividend stocks, investors can be assured that the steady cash flow from Coca-Cola is beyond solid -- with 50+ years of proof.

Photo: UPS

8. United Parcel Service
Loving logistics can mean a healthy dividend cash flow. For investors in UPS, the going rate is a 2.71% dividend yield. Though this is one of the smallest holdings in the Berkshire Hathaway portfolio, the healthy dividend is intriguing for the dividend-oriented investor. With consistent increases in its payouts, UPS has provided shareholders with a 2%+ yield since late 2006.

9. Johnson & Johnson
The second health-care/pharmaceutical company and third dividend aristocrat on the list has a dividend yield of 2.64%. Johnson & Johnson may represent only a small portion of Buffett's overall portfolio, but for those investors interested in blue chip dividend payers, it's a major contender.

With 70% of its sales coming from products that are either No. 1 or No. 2 in terms of global market share, it would be hard to dismiss J&J when considering new dividend investment options.

Bonus round: GlaxoSmithKline
Though Berkshire Hathaway completely divested its investment in the British pharmaceutical company as of year-end 2013, investors may still be interested in its 5.64% dividend yield. Despite news of a three-way deal boosting its share price, investors may still be enticed by the company's impressive payout history.

Starting point
Though following the stocks that professional investors buy can be a great jumping off point for your own investing, be sure to do you homework before sending off buy orders. All of the companies listed above provide great yields for dividend investors, but may not fit your personal risk profile or investing thesis. For more coverage of the companies mentioned and future Buffett moves, keep visiting Fool.com!

Buffett loves dividends. Here's even more dividend stocks you can buy
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.

 

Follow along as we countdown the days until Berkshire Hathaway's annual shareholder meeting in Omaha, Nebraska on May 3. A handful of Fools will be attending the event and live chatting with other Fools around the globe! Click HERE to set a reminder for yourself about the live chat!

The previous articles in our "12 Days of Berkshire" series:
12 Reasons Warren Buffett Is an Incredible Investor and How You Can Learn From Him

11 Things in Your House Making Warren Buffett Money

10 Reasons Berkshire Hathaway Is the Best Stock You Can Buy


Read/Post Comments (3) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 24, 2014, at 1:43 PM, DoctorLewis4 wrote:

    The best way to invest with Mr. Buffett is to buy Berkshire stock.

  • Report this Comment On April 24, 2014, at 2:37 PM, classic216 wrote:

    Three of the stocks you mentioned I wouldn't exactly call "Buffett-approved." Though he may still own some shares, he has sharply reduced his positions in Kraft, Johnson & Johnson, and Proctor & Gamble.

    http://www.marketwatch.com/story/buffetts-berkshire-cuts-sta...

  • Report this Comment On April 25, 2014, at 4:37 PM, XMFHarleyQuinn wrote:

    Classic216 -

    You're correct that Berkshire's holdings of those three investments are considerably smaller than they had been previously. But the intention of the article was to highlight opportunities for dividend investors that Buffett and his team had selected for the Berkshire portfolio, regardless of holding size.

    Every investor needs to monitor their holdings periodically, and make adjustments as necessary. Though Berkshire may not hold as much Kraft, J&J or P&G as it once did, it's still worthwhile for individual investors to take a look to see if the companies match their own investment needs.

    Thanks for reading!

    Jessica

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