This article was updated on August 29, 2017, and originally published on March 14, 2017.
Warren Buffett is considered one of the best buy-and-hold investors of all time, and one thing he likes to see in the stocks he invests in is a generous dividend policy, with room to grow the dividend over time.
Not all of the stocks in Berkshire Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) portfolio are of the high-dividend variety, however, so here's a list of Berkshire's top 10 dividend stocks by current yield, excluding relatively small holdings (worth $250 million or less).
1. General Motors -- 4.31% dividend yield
General Motors (NYSE:GM) is Berkshire's highest-yielding dividend stock that is a major holding in the portfolio. While we don't know for sure what Buffett likes about GM, he has spent considerable time talking about betting on American business over the long run, and GM is certainly a good way to do that. In addition, GM's massive growth opportunities in China and other foreign markets are likely attractive to Berkshire as well.
2. IBM -- 4.13% dividend yield
Buffett's 2011 investment in IBM (NYSE:IBM) surprised many of his followers, as the Oracle has historically been wary of investing in tech stocks. However, Buffett loves businesses with "stickiness" -- that is, companies that have customers who rarely leave -- and IBM certainly qualifies.
3. General Electric -- 3.72% dividend yield
A relatively small position in Berkshire's portfolio (only about $300 million), the General Electric (NYSE:GE) stake was a result of the company exercising an old warrant that Berkshire acquired during the financial crisis. Like GM, it's possible that Berkshire has held onto its shares because Buffett sees the company as a bet on the success of American business.
4. Phillips 66 -- 3.27% dividend yield
Oil refining is a "wide moat" business, with high barriers to entry and large cash flow potential. Phillips 66 (NYSE:PSX) also has shareholder-friendly management that emphasizes aggressive share buybacks, steadily growing dividends, and responsible capital spending. And since Phillips 66 has such a diverse business, it can do well whether oil prices are high or low.
Image source: Coca-Cola.
5. Coca-Cola -- 3.25% dividend yield
Coca-Cola (NYSE: KO) is a longtime Buffett favorite, and is one of only two stocks on this list that has been a major holding of Berkshire for more than 25 years (Wells Fargo is the other). Buffett loves Coca-Cola not just because he is a regular consumer of its products, but for its incredible brand power and massive, efficient distribution network.
6. Wells Fargo -- 2.95% dividend yield
Berkshire's Wells Fargo (NYSE:WFC) stake is worth nearly $28 billion, making it the company's largest common stock position, aside from Kraft Heinz, which is accounted for in a different way. Despite the recent "fake accounts" scandal, Buffett hasn't sold a single share of the bank, calling it an "incredible institution." The bank is consistently the most profitable of the largest U.S. banks.
7. Kraft Heinz -- 2.88% dividend yield
Berkshire's massive stake in Kraft Heinz (NASDAQ:KHC) was a result of the 2015 merger of Kraft Foods with Heinz. Berkshire's shares represent a stake of about 25% in the food giant, and it's safe to say that the economies of scale involved with combining two massive food businesses is an appealing characteristic to Buffett.
8. US Bancorp -- 2.11% dividend yield
US Bancorp (NYSE:USB) is consistently one of the most profitable and efficient banking operations in the United States, and has historically done a tremendous job managing risk. Like the other banks on this list, US Bank could see profits rise in the coming years if the anticipated benefits of the Trump presidency actually happen.
9. (tie) Monsanto -- 1.83% dividend yield
Monsanto is a new investment in Berkshire's portfolio, and this may be one rare instance where Buffett doesn't plan to hold his shares for the long run. Specifically, Bayer agreed to buy Monsanto (NYSE:MON) for $128 per share (about 11% more than the current share price), so Buffett will make a quick profit if the deal goes through. And even if the deal doesn't close, Bayer agreed to pay Monsanto a $2 billion fee.
9. (tie) M&T Bancorp -- 1.83% dividend yield
Like Buffett's other bank stocks, M&T Bank (NYSE:MTB) has performed extremely well since the election, as rising interest rates, looser regulations, and lower corporate tax rates could be a big boost to banks' bottom lines. Buffett has praised M&T's management, and is likely a big fan of the bank's strong balance sheet and responsible history of growth and expansion.
Matthew Frankel owns shares of Berkshire Hathaway (B shares) and General Motors. Matthew Frankel has the following options: long January 2019 $20 calls on General Electric. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool owns shares of General Electric. The Motley Fool has a disclosure policy.
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