Just because Warren Buffett is wary of the stock market right now doesn't mean he isn't buying any stocks. In the first quarter of 2025, the legendary investor added to Berkshire Hathaway's stakes in 12 stocks and initiated a new position in another.
The list included a high-yield dividend stock that seems to have become one of Buffett's favorites: satellite radio operator Sirius XM Holdings (SIRI 0.35%). Should you buy this stock, too?
Image source: The Motley Fool.
Buffett's getting serious about Sirius
Buffett first invested in Sirius XM in late 2016. He bought more shares in the first quarter of 2017. By the end of 2021, though, Berkshire fully exited its position.
Time passed, but Buffett and his team hadn't forgotten about Sirius XM. In the third quarter of 2023, Berkshire again opened a position in the stock. Buffett resumed piling into Sirius XM in late 2024, close to when Liberty Media merged its Sirius XM tracking stocks with the satellite radio company.
NASDAQ: SIRI
Key Data Points
Berkshire owned shares of those tracking stocks in addition to owning a position in Sirius XM. After the merger was completed in September 2024, the conglomerate's direct ownership of Sirius XM increased.
In the first quarter of 2025, Berkshire bought another 2.31 million shares of Sirius XM. It now owns 35.4% of the satellite radio operator. Berkshire has a larger stake in only one other company, dialysis services provider DaVita.
What Buffett likes about Sirius XM
Buffett famously only invests in businesses he understands. Although he might not be an expert on satellite radio, the Oracle of Omaha no doubt views Sirius XM's business model as right in his wheelhouse.
The company generated roughly 77.5% of its total revenue from subscriptions in the first quarter of 2025. As a longtime fan of newspapers, Buffett appreciates the beauty of a subscription-based model.
Subscriptions translate to stable recurring revenue. Being able to project revenue into the future makes it much easier to forecast earnings. And Buffett won't buy a stock when he can't reasonably estimate earnings growth for at least five years out.
He also only buys stocks with valuations that are reasonable relative to their future earnings potential. Sirius XM checks off that box for Buffett, too. The company's shares trade at only 7.9 times forward earnings. Its price/earnings-to-growth ratio (PEG) ratio, which uses analysts' five-year earnings growth projections, is a low 0.66, based on data from LSEG. Buffett might quibble with those numbers, but he clearly views the valuation as attractive enough to continue increasing Berkshire's stake in the company.
Last, but not least, Buffett probably likes Sirius XM's dividend. Granted, he doesn't invest in companies only because of their dividends. However, juicy payouts are nice bonuses. Its forward dividend yield of 4.79% certainly qualifies as juicy.
Should you buy the stock, too?
As much as I respect Buffett and his investing prowess, I'm a little leery of calling Sirius XM a great pick for other investors to buy right now. Sure, the company's subscription business model is straightforward, its valuation seems attractive, and its dividend is mouth-watering. The main problem, though, is that it isn't growing.
The company's self-pay subscriber count fell by 303,000 year over year in the first quarter of 2025. First-quarter revenue declined by 4%. Profits tumbled 15%.
Sirius XM is focusing on cost-cutting to boost its bottom line. The company is launching new programs that could attract more subscribers. These efforts might help turn things around.
However, I think investors will be better off remaining on the sidelines for now. Just because Buffett is buying this high-yield dividend stock doesn't mean that you should, too.
