Considered by many to be one of the greatest investors of our time, Warren Buffett's company has made more than $4.6 billion so far this year -- in dividends alone -- from just 10 of the more than 40 holdings in his Berkshire Hathaway portfolio.
Among Buffett's top holdings (through Berkshire) are three companies that have provided strong returns topped off by quarterly dividend payouts. One is a major player in technology with a product being used regularly by more than 115 million people just in the U.S. and more than a billion people worldwide. The second is an iconic beverage manufacturer. And the third is a Dividend Aristocrat riding the wave of higher pricing to beat consensus estimates on revenue and earnings.
They all sit squarely in the top holdings for Buffett, but are they right for your portfolio?
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Apple's iPhone has over 115 million users
As of June 30, Apple (AAPL 1.27%) continued to be the largest holding in Buffett's Berkshire Hathaway portfolio, making up 41% of the total holdings at a market value of $136 billion. Apple generates its money from innovative mobile devices, laptops, tablets, wearables, and services.
In the U.S., the company holds more than a 50% smartphone market share, with no signs of competition taking a bite anytime soon. In fact, since the first quarter of 2020, only two major smartphone makers have seen growth in market share for U.S. smartphone shipments. The first is Apple, going from 46% to 53%. The second is Lenovo -- including Motorola -- with a small but meaningful share gain, from 4% to 12%. Samsung and LG have fallen during the same time period.
In fiscal Q4 the company displayed more of its staying power, with record quarterly revenue of $83.4 billion. It's also making moves toward less reliance on outside vendors by releasing its new MacBook Pro -- the last in a line of products -- equipped with its in-house M1 chip, replacing the previous Intel core processor.
Whether it's an iPhone, MacBook, iPad, Apple TV, AirPods, or the rumor of an iCar, it's easy to see Apple's stamp on everyday life. And where innovation will lead us into the future, Buffett's top holding should give investors plenty of confidence that Apple is right for any portfolio.
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Coca-Cola's dividends are refreshing to investors
Coca-Cola (KO 1.50%) is an iconic brand that has grabbed the attention of customers across generations through creative advertising and a quality product. It's that type of branding that keeps customers attached and coming back for more, leading revenue and earnings higher while investors enjoy a stock price nearing all-time highs. And to help make sure those investors stick around as new investors join in on the fun, the company has been increasing its annual dividend for 59 consecutive years, making it a Dividend King.
In the company's latest dividend declaration, it announced a quarterly payout of $0.42 per share. That's good enough to hit a dividend yield of 2.97%, resulting in a $1.68 annual dividend per share. By comparison, the current S&P 500 dividend yield is at 1.32%. For an investor who puts $5,000 into Coca-Cola at the current stock price of $56.35, annual dividends would pay out just shy of $150, which could be reinvested for almost three more shares by the end of one year, should the stock price hold its current value. For long-term investors, those additional shares provide further opportunity to make money off of a rising stock price and additional dividends -- which have been rising over the past four years at an average of $0.06 per year.
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Rising oil and gas prices are powering Chevron to new highs
Rising oil and gas prices have helped boost Chevron's (CVX 0.44%) earnings to $6.1 billion in the third quarter, compared with a loss of $207 million for Q3 2020, thanks to an average sales price per barrel of crude oil and natural gas liquids of $58 in Q3 2021. That was an increase of 87% over the $31 price tag a year earlier.
The company is also making strides toward securing future growth by lowering carbon emissions to make it more environmentally friendly. It is allocating $10 billion through 2028 with the goal of reducing carbon intensity by greater than 5% over what it was in 2016, and to achieve net-zero upstream emissions by 2050.
Bolstered by its Q3 earnings, Chevron's stock spiked by 13% during the month of October and sits just 10% below its all-time high of $130 a share reached back in 2014, at a current price of $117. Its annual dividend of $5.36 a share, which could entice some investors, is the culmination of increased annual dividends for 33 consecutive years, marking Chevron as a Dividend Aristocrat.
A $5,000 investment in Chevron would buy 42 shares of the company stock at the current price. Those 42 shares would pocket an investor $225 in annual dividends, allowing for compounded future gains through reinvestment as well.
Do all three belong in my portfolio?
At the end of the day, investors make decisions that will ultimately meet the goal of making them money by buying low and selling high. But sometimes investing decisions can come down to personal values, whether a company is a moneymaker or not.
Even Buffett has addressed this dilemma in the past, stating in 1997 that he did not have an interest in owning shares in a company that manufactures chewing tobacco, though he would have no problem owning shares in a company that sells the tobacco. In his words, "the one bothers me and the other doesn't bother me."
The three companies outlined above have a history of generating revenue growth and positive earnings, leading to stock prices at -- or about to revisit -- all-time highs. Whether you like Apple or Samsung, Coke or Pepsi, oil and gas or alternative energies, the three stocks featured here offer the opportunity for long-term gains and quarterly dividends that provide consistent income no matter what stage of life you might be in.
