Does he or doesn't he? It makes sense that there could be some confusion about whether or not Warren Buffett likes dividends.
Buffett has never been in favor of his own Berkshire Hathaway (BRK.A -0.05%) (BRK.B 0.19%) paying dividends. However, he's added quite a few dividend stocks to Berkshire's portfolio through the years. Berkshire received around $785 million in dividends last year from Apple alone.
But some of the dividend stocks in Berkshire's portfolio are better picks for income investors than others. Here are three Buffett dividend stocks you can buy right now.
AbbVie (ABBV 0.18%) ranks as one of only four Dividend Kings (S&P 500 members with at least 50 consecutive years of dividend increases) among Berkshire's holdings. The big drugmaker's dividend yield of 3.6% also stands out as one of the most attractive yields that Buffett receives.
But the dividend isn't the only reason for investors to like AbbVie. The pharma stock continues to handily beat the market, jumping 14% year to date. Despite almost doubling over the past three years, AbbVie remains a bargain with shares trading at only 11.5 times expected earnings.
With a fantastic dividend, strong growth, and attractive valuation, what's there not to love about AbbVie? The one fly in the ointment is that the company's top-selling product, Humira, loses U.S. exclusivity next year. The autoimmune-disease drug raked in $20.7 billion in sales last year. AbbVie will definitely feel the pain from Humira's loss of exclusivity.
The good news, though, is that the company has been preparing for Humira's sunset for a long time. AbbVie has already launched two blockbuster successors to Humira. It acquired Allergan, gaining a stable of successful products such as Botox and Vraylar. AbbVie expects to deliver strong revenue growth throughout the decade after a temporary pause in 2023.
Many income investors have been fans of Chevron (CVX -2.33%) for a long time. Buffett joined the club in 2020 with Berkshire buying shares of the oil and gas giant several months after the start of the COVID-19 pandemic. Chevron remains a top dividend stock with its yield of 3.3%.
That yield has been much higher in the past. However, it's not because Chevron has cut its dividend. Actually, the company has increased its dividend for 35 consecutive years. Instead, Chevron's dividend yield is lower mainly because its stock is absolutely trouncing the market. The energy leader's shares have soared nearly 40% so far this year.
Two factors are working in Chevron's favor in a huge way right now. Oil and gas prices have risen sharply in large part because of the disruption resulting from Russia's invasion of Ukraine. At the same time, energy demand is increasing as the global economy recovers from the impact of the pandemic.
Could Chevron's fortunes reverse in the not-too-distant future? I don't think so -- at least not in a major way that would impact its dividend.
The demand for fossil fuels is likely to increase for decades to come, albeit at a slower pace as the transition to renewable energy sources moves forward. Chevron is also investing in renewable energy itself to benefit from this transition.
3. Bristol Myers Squibb
Bristol Myers Squibb (BMY -0.86%) stands out as another Buffett dividend stock that's outperforming the overall stock market by a wide margin. Shares of the big drugmaker have jumped more than 20% year to date.
To be sure, BMS' dividend track record isn't as impressive as AbbVie's or Chevron's. However, the company has increased its dividend for 13 consecutive years -- which isn't shabby at all. And while BMS' dividend yield of 2.8% is lower than the other two companies on our list, it's nonetheless attractive.
Bristol Myers Squibb really shines when it comes to valuation, though. Its shares trade at less than 10 times expected earnings. The reason behind this bargain price is that BMS already faces generic competition in the U.S. for its top-selling drug, Revlimid, and also has other blockbuster drugs that lose exclusivity within a few years.
However, BMS expects that its newer drugs and pipeline programs will be able to generate up to $25 billion per year by 2030. The company thinks that anemia drug Reblozyl, experimental heart failure drug mavacamten, experimental psoriasis drug deucratvacitinib, and cancer cell therapies Abecma and Breyanzi could each make more than $4 billion annually.