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2 Powerful Warren Buffett Dividend Stocks You Can Buy Right Now

By Eric Volkman – Aug 24, 2021 at 6:11AM

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Both are high-yielders at over 4%.

Quick, can you name a famous investor who earns billions of dollars in dividends every year from publicly traded companies? If you said Warren Buffett, you've identified one star stock picker at the top of the list.

Buffett and his investment vehicle Berkshire Hathaway (BRK.A -1.39%) (BRK.B -1.41%) are huge on dividend stocks. So much so that the company stands to draw nearly $4 billion in such payouts alone this year.

In that spirit, here's a look at two particularly attractive Buffett dividend stocks that can pump out a thick stream of regular income to your portfolio, too: Verizon Communications (VZ 0.18%) and STORE Capital (STOR 0.02%).

Warren Buffett.

Image source: The Motley Fool.

Verizon 

Up until a few years ago, the old-fashioned Buffett basically eschewed tech stocks. That changed with the arrival of Ted Weschler and Todd Combs as investment managers at Berkshire Hathaway. Since then, the two relatively young men were instrumental in Berkshire taking a stake in Apple (AAPL 0.01%). Combs was likely the decision maker in its buying cloud-based data storage and analytics service provider Snowflake (SNOW -1.84%).

It's probable that one or both were also the trigger-pullers on the company's largest telecom sector investment currently, rock-solid incumbent Verizon, which also happens to be a dependable dividend payer.

Operating in a business with constant and heavy cash flow thanks to its nearly 95 million wireless retail connections, the company has plenty of dosh for a high dividend.

Paying one is a long-standing Verizon habit. It and its corporate predecessors have dispensed a disbursement in every quarter since the mid-1980s. Over the past 10 years, that's crept up from just under $0.49 per share to the current level of almost $0.63. That makes for a hearty dividend yield of 4.5% on the most recent closing share price.

Meanwhile, Verizon is assertively building out its 5G network, which when fully broadened should deliver extremely fast internet connection speeds to its customers. Yes, that's an expensive undertaking, but with nearly $130 billion in revenue and free cash flow approaching $24 billion last year, the company has more than enough for that shareholder-pleasing dividend.

The word DIVIDENDS ink stamped onto a sheet of paper under a pencil and a paper clip.

Image source: Getty Images.

STORE Capital

Of the nearly 50 stocks in Berkshire Hathaway's portfolio of publicly traded companies, there is but a single real estate investment trust (REIT): STORE Capital.

The company is focused on the retail sector, which was hit hard by the pandemic. But the damage was contained by the REIT's strategy of limiting exposure: No single one of its tenants contributes over 3% to the company's total rental income.  

That, plus an aggressive expansion program that's seen the company grow its portfolio to more than 2,700 properties across the U.S., has kept it on a growth path. Rental revenue growth was stunted last year because of the pandemic, but still grew (by 3% compared to 2019).

If the company's recently released second-quarter figures are any indication, better times are ahead: Rental revenue increased by 15% on a year-over-year basis. Meanwhile, STORE Capital's adjusted funds from operations (AFFO, the most important profitability line item for REITs) leaped 25% across that one-year stretch.

For REITs, since they're required to pay out nearly all of their profits in the form of shareholder remuneration, higher profitability equals higher dividend. As STORE Capital continues to grow its business, so grows its payout. Since declaring its first dividend after its 2014 IPO, the REIT's distribution has ballooned from just over $0.11 per share to the present $0.36. At the current share price, that yields a generous 4.1%.

Eric Volkman owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Snowflake Inc. The Motley Fool recommends STORE Capital and Verizon Communications and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Berkshire Hathaway Stock Quote
Berkshire Hathaway
BRK.B
$310.69 (-1.41%) $-4.44
Berkshire Hathaway Stock Quote
Berkshire Hathaway
BRK.A
$469,207.98 (-1.39%) $-6,635.02
Verizon Communications Stock Quote
Verizon Communications
VZ
$38.41 (0.18%) $0.07
Apple Stock Quote
Apple
AAPL
$141.19 (0.01%) $0.02
STORE Capital Stock Quote
STORE Capital
STOR
$31.82 (0.02%) $0.01
Snowflake Inc. Stock Quote
Snowflake Inc.
SNOW
$134.05 (-1.84%) $-2.51

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

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