Berkshire Hathaway (BRK.A -0.33%) (BRK.B -0.56%) was a struggling textiles manufacturer when Warren Buffett acquired a controlling stake in 1965, but he has grown it into a $1 trillion conglomerate that owns several subsidiaries like Dairy Queen and GEICO Insurance, in addition to a $294 billion portfolio of publicly traded stocks and securities.
Buffett likes investing in companies with steady revenue growth, robust profits, and experienced management teams. But he especially likes companies with active dividend schemes and share buyback programs, because they help compound his money much faster. This is a key reason why Berkshire has become a cash flow-generating machine, and the results speak for themselves.
Had you invested $500 in Berkshire stock when Buffett took over in 1965, it would have grown to a whopping $22.3 million by the end of 2024. The same investment in the S&P 500 (SNPINDEX: ^GSPC) would have turned into $171,453 over the same period.
Berkshire owns several dividend-paying stocks, but three of them, in particular, represent 31.7% of the total value of its $294 billion portfolio. Assuming Berkshire doesn't sell a single share in any of the three companies, they are likely to pay the conglomerate an eye-popping $2.1 billion in dividends during 2025 alone.
Image source: The Motley Fool.
1. American Express: $479 million in potential dividends this year
American Express (AXP -1.35%) is a global payments powerhouse. It issues credit cards directly to consumers and businesses, funds the underlying lines of credit, and operates the payment network that facilitates every transaction. Its business model differs from competitors like Visa and Mastercard (which are also in Berkshire's portfolio), which run their own payment networks but rely on banks and other third parties to issue cards and fund the loans.
Buffett's relationship with American Express dates back to the 1960s. The credit card giant's stock plummeted 50% in 1964 when it discovered that a client had fraudulently secured a sizable loan by using assets that didn't exist, and investors feared it could drive the company into bankruptcy. Buffett, however, felt American Express would emerge from the crisis, so he started accumulating shares over a period of decades. He went on to acquire $1.3 billion worth during the 1990s alone.
Today, Berkshire owns 151.6 million American Express shares worth $47.2 billion, which represents 16.1% of its portfolio.
Berkshire received two quarterly dividend payments from the credit card giant this year already. The first was for $0.70 per share on Feb. 10, and the second was for $0.82 per share on May 9. The conglomerate is likely to earn two more payments of $0.82 this year, taking its total to $3.16 per share in 2025.
Assuming Berkshire holds onto each of its 151.6 million shares, it could earn $479 million in dividend payments this year alone.
2. Chevron Corporation: $811 million in potential dividends this year
Chevron (CVX -1.29%) is one of the world's largest oil and gas companies. It undertakes exploration and drilling operations across the globe, from the Gulf of America all the way to Australia, but it also operates downstream in transportation and refining. It even owns over 8,000 consumer-facing gas stations in the U.S.
Berkshire first invested in Chevron in 2020, and despite trimming its position in 2023 and 2024, it still owns 118.6 million shares worth $18.3 billion as of this writing (July 28), which accounts for 6.2% of the value of its portfolio.
The oil and gas giant currently pays a quarterly dividend of $1.71 per share, and it has made two payments this year so far: one on March 10, and the other on June 10. History suggests its third and fourth payments will be the same size, taking its total per-share payments for 2025 to $6.84.
Therefore, Berkshire is on track to earn $811 million in dividends for the whole of 2025 as long as it doesn't sell any shares. Chevron has increased its dividend every year for 38 consecutive years, and with a current yield of 4.4%, don't be surprised if it remains in Berkshire's portfolio for the long term.
3. Coca-Cola: $816 million in potential dividends this year
The Coca-Cola (KO -1.29%) company is best known for its flagship soda of the same name, but it has aggressively expanded over the years both organically and through acquisitions. Its product portfolio now spans across 200 different brands worldwide, which are distributed through supermarkets, gas stations, fast-food chains, and everything in between.
Between 1988 and 1994, Buffett accumulated 400 million Coca-Cola shares for Berkshire's portfolio, at a total cost of $1.3 billion. He has never sold a single one, and today, that position is worth an eye-popping $27.6 billion, which accounts for 9.4% of the value of the conglomerate's portfolio.
The soda giant currently pays a quarterly dividend of $0.51 per share, and it has made two payments this year so far. The first was on April 1, and the second was on July 1. It's likely to make two more of the same size before the year is over, amounting to $2.04 in per-share payments for the whole of 2025.
As long as Berkshire doesn't sell any of its 400 million shares, it's on track to earn $816 million in dividend payments in 2025. In other words, the conglomerate now recoups more than half of its original $1.3 billion investment in dividends alone every year.
It's worth noting that on May 3, Buffett announced he would step down as CEO of Berkshire at the end of 2025 and hand the reins to his chosen successor, Greg Abel. Investors might be wondering if his brand of long-term value investing will endure without him at the helm, and it's impossible to say for sure. But he will continue to serve as the conglomerate's chairman, so he won't be entirely out of the picture.
Personally, I think it's unlikely Berkshire will dump its long-standing dividend payers under its new leader, purely because of the immense cash flow they provide, which can be used to fund other acquisitions.
