Amid rising interest rates and a tumultuous geopolitical climate, the stock market has been in a slump over the past year. In uncertain times, investors may hesitate to put their cash into the market, but historically speaking, these are often the best times to do so.

One stock that I have my eye on is also a position that Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has been buying hand over fist. From my point of view, it's a rare investment that provides a hefty dividend and has growth potential.

Here's why the entertainment conglomerate Paramount Global (PARA 1.73%) (PARA.A -1.24%) is the next stock I will buy.

Paramount Global has flipped the script

Paramount Global stock is down about 32% over the past year and nearly 60% over the past five years. Its film revenue obviously took a hit during the pandemic, but it has also had self-inflected wounds from streaming failures. Launched initially as CBS All Access, Paramount's streaming service failed to gain traction after launching in 2014. Combine those factors with slowly declining broadcast and cable television revenue, and it makes sense that the stock has struggled.

However, the company has turned around its fortunes in the film and streaming divisions over the past year.

First, Paramount Pictures, its film division, released Top Gun: Maverick, the second-highest-grossing movie of 2022. It has made nearly $1.5 billion worldwide at the box office as moviegoers returned to theaters. The film division, which was essentially a zero during the height of the pandemic, has a bright future with Paramount's many franchises, including Mission Impossible, Star Trek, and Transformers

Two people watch a film at a movie theater.

Image source: Getty Images.

Second, Paramount rebranded its streaming service from CBS All Access to Paramount+ in 2021, with positive results. The company's flagship streaming service added 9.9 million to its 56 million subscribers from Q3 2022 to Q4 2022, a 21% increase. The entertainment conglomerate also has other direct-to-consumer (DTC) properties like BET+, PlutoTV, and Showtime that provide another 21 million subscribers.

Together, Paramount's film and DTC divisions are beginning to make meaningful contributions to the top line. Driven by Top Gun: Maverick, the film division generated $3.7 billion in 2022, 38% more than in 2022. And the DTC business pitched in $4.9 billion last year, 47% more than the $3.3 billion in 2021. With the film business rebounding and a growing DTC base, it's easy to see strong growth in those areas in the coming years.

Berkshire keeps buying Paramount Global stock

For an investor in uncertain times, it can often be reassuring to see legendary investors buy stocks of companies you also want to buy. For Paramount Global, that legendary investor is Berkshire Hathaway. Chairman Warren Buffett hasn't publicly commented on the investment, meaning we don't know who decided to make it -- Buffett himself along with Charlie Munger, or one of their two investing lieutenants, Ted Weschler and Todd Combs.

Still, we do know that Berkshire started a position in Q1 2022 and added to it in each subsequent quarter. As a result, Berkshire Hathaway's initial 11% ownership of Paramount Global has swelled to 15.4% as of December 31, 2022.

The bottom line

Paramount Global has valuable intellectual property and a long history of success in navigating the cutthroat entertainment business. While the company was slow to streaming, it is finally gaining steam with consumers.

The company also pays a quarterly dividend of $0.24 per share, equating to a hefty dividend yield of 4.4%. With a payout ratio (annual dividend payments divided by annual earnings) of roughly 62%, management may not raise it anytime soon. Still, it's unlikely management will cut it, either, as any payout ratio below 75% is generally considered safe.  

With promising revenue growth, a reliable dividend, and the confidence of the best investing firm of our generation, Paramount Global is an outstanding stock, which is why I will soon be adding it to my portfolio.