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3 Warren Buffett Dividend Stocks That You Can Buy Right Now

By Keith Speights - Apr 19, 2020 at 7:33AM

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They're feeling some pain from the COVID-19 pandemic. But their long-term prospects remain strong, and their dividends are solid.

Warren Buffett thinks that his company, Berkshire Hathaway (BRK.A 1.66%) (BRK.B 1.71%), can use its cash in better ways than to pay a dividend. But that hasn't stopped the Oracle of Omaha from investing in stocks that pay nice dividends that boost Berkshire's total investing returns. Of the 52 stocks in Berkshire's portfolio at the end of 2019, 36 paid dividends.

Some of those dividend stocks are better choices than others, though. Here are three Warren Buffett dividend stocks that you can buy right now.

Warren Buffett with people in background

Image source: The Motley Fool.

1. Apple

Aside from Berkshire Hathaway itself, Apple (AAPL 2.14%) ranks as Buffett's favorite stock. It's Berkshire's largest holding, and Buffett once said that he'd "love to own 100%" of Apple if he could.

Apple probably isn't the first thing that comes to most investors' minds when they think of dividends stocks. However, the tech giant initiated a dividend program in 2012. Its dividend yield currently stands at a little over 1%. Although that's not an overly impressive yield, Apple is in a great position to boost its dividend in the future. 

The company is feeling some pain from the COVID-19 outbreak. It temporarily closed Apple Stores as a result of the pandemic. Sales of the company's iPhones, iPads, and other products could fall with a likely coronavirus-driven recession.

But the long-term prospects for Apple continue to look bright. The adoption of 5G networks should drive demand for its new iPhones that are on the way that will support 5G. Apple's services and wearables enjoy strong momentum. The company could even emerge from the COVID-19 crisis stronger than before as it moves toward a more geographically diversified supply chain.

2. Bank of America

Bank of America (BAC 1.09%) comes in behind Apple as Berkshire's second-biggest holding. Warren Buffett has long been a fan of bank stocks. Bank of America is one of the strongest in the sector.

It also claims an attractive dividend yield of nearly 3.4%. Bank of America places a high priority on its dividend program, raising its dividend payouts by a whopping 260% over the last five years. 

Sure, the company and its peers face some headwinds right now. Low interest rates aren't great for banks. High unemployment rates increase the risk of defaults on loans. Bank of America missed Q1 earnings estimates as it put aside $4.8 billion for potential loan losses resulting from the COVID-19 outbreak.

However, these are temporary problems. Bank of America's financial position remains strong. Its valuation is attractive, with shares trading at 10.4 times expected earnings. I wouldn't be surprised if Buffett takes advantage of the bargain and scoops up more shares over the next few months.

3. Johnson & Johnson

It's probably fair to say that Johnson & Johnson (JNJ -1.10%) isn't one of Buffett's favorite stocks. In fact, he decided to sell much of Berkshire's stake in the healthcare giant several years ago after a series of miscues by the company.

But Buffett almost certainly likes J&J's dividend. Johnson & Johnson recently increased its dividend for the 58th consecutive year -- a remarkable track record. Its dividend currently yields 2.7%.

J&J's medical device segment experienced a sales decline in the first quarter as hospitals pushed back elective surgical procedures in the wake of the COVID-19 pandemic. The company also lowered its full-year earnings guidance due to the viral outbreak.

CEO Alex Gorsky, though, said that "Johnson & Johnson is built for times like this." I think he's right. The company's financial strength and diversification across the healthcare sector will enable it to weather the storm better than most. Over the long term, J&J should deliver solid returns for investors just as it has for decades.

Keith Speights owns shares of Apple, Bank of America, and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$172.10 (2.14%) $3.61
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$36.30 (1.09%) $0.39
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$165.30 (-1.10%) $-1.84
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$452,697.25 (1.66%) $7,395.26
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$301.55 (1.71%) $5.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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