Warren Buffett is known for seizing opportunity. The billionaire investor likes to snap up strong businesses at a good price. And he has a soft spot for dividends. That's why it's no surprise that Buffett's Berkshire Hathaway added to its position in McKesson (MCK 1.58%) in the second quarter of this year.

McKesson is a leader in the distribution of pharmaceutical products. And the company is starting to build its reputation in the world of dividends. It recently increased its payment for the sixth consecutive year. Now, the question is: Should you follow Buffett into this passive income stock?

The role of passive income

First, let's talk about the role a passive income stock can play in your portfolio. These stocks offer you dividends each year -- regardless of the stock's actual performance. What do you have to do to earn these dividends? You just have to own the stock. It's as simple as that.

This extra income is always welcome. But it's particularly appreciated during tough times. Even if your portfolio is down, you can count on this passive income.

McKesson is the perfect combination of a company with a good dividend policy -- and strong earnings and future prospects.

In the most recent quarter -- the fiscal 2023 first quarter -- McKesson returned $1.1 billion in cash to shareholders. That came in the form of $71 million in dividend payments and $1 billion in common stock repurchases. Stock repurchases are a positive sign because they show a company is confident in its business.

Today, McKesson pays a forward annual dividend of $2.16 a share at a yield of 0.58%. But this may be just a starting point. As mentioned above, we're only a few years into the potential consecutive dividend increase story. McKesson noted its "commitment to a growing dividend" in the recent earnings report.

McKesson may not be in the league of Dividend Aristocrats yet. But it may eventually get there. All this means McKesson could offer you decent passive income today -- and that income possibly will grow as time goes by.

A solid business

But you wouldn't want to buy a company for its dividend alone. You'll also want a player with a solid business. McKesson scores a win there too.

The company is in a bit of a transition right now. It's selling its European businesses as part of a plan to streamline and focus on its highest-margin areas. Only a year after announcing its plan to exit Europe, the company has already entered agreements to sell or has completely divested 11 of its 12 businesses in the region.

At the same time, McKesson is strengthening its presence in two promising markets: Oncology and biopharma services. For example, it recently announced a joint venture with HCA Healthcare to expand its clinical research services.

But even in this transition period, McKesson's earnings are on the rise. The company reported a 7% increase in total revenue and a 5% increase in adjusted earnings per diluted share in the quarter. And McKesson lifted its full-year adjusted earnings per diluted share guidance to the range of $23.95 to $24.65. If we exclude certain exceptional items, this represents 10% to 15% growth from the previous year.

Is now the time to buy?

All this sounds great. But is right now really the moment to invest in McKesson?

The stock has climbed more than 50% this year. And it's trading close to its highest in relation to forward earnings estimates. That said, this level of just over 15 doesn't seem ridiculously high considering McKesson's dividend, current earnings performance, and growth prospects.

Right now, McKesson isn't trading at dirt cheap levels. But it's still a reasonable buy for investors who, like Buffett, appreciate passive income -- and a stock that may shine over time.