10 Warren Buffett Stocks for Passive Income

Warren Buffett is a billionaire who's made his fortune investing in companies. If his net worth doesn't prove he's one of the world's most successful investors, his track record of outpacing the S&P 500 long term does.

Buffett likes investing in mature companies he can hold indefinitely -- companies with predictable profitability growth and enduring competitive advantages. Those same qualities are also attractive to the dividend investor who's building a reliable, passive income stream.

Here's a closer look at 10 dividend-paying stocks from the Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) portfolio that may be right for you to buy and hold forever. Berkshire Hathaway, the holding company Buffett runs, reports its stock positions in quarterly 13F filings with the Securities and Exchange Commission.

5 Stocks Under $49
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Oil and gas company Chevron (NYSE: CVX) is a Dividend Aristocrat. To earn that status, the company must be in the S&P 500 and have increased its annual dividend for the past 25 years consecutively.

Chevron has an attractive yield of 3.7% and a low payout ratio below 40%. Payout ratio is the percentage of earnings the company pays out to shareholders. A high payout ratio, say above 80%, could indicate that the earnings may not continue to support the dividend going forward.

ALSO READ: Why Chevron Stock Jumped 23% in the First Half of 2022

Coca-Cola (NYSE: KO) makes and distributes nonalcoholic beverages globally. The company enjoys a loyal brand following for its flagship brand Coke. It also finds growth through geographic expansion, new categories (like coffee), innovation in packaging, and acquisitions.

Coke's profitability in 2020 deteriorated when its fountain soda business was hit hard by pandemic-related lockdowns. Still, the company increased its annual dividend anyway, as it's done every year since the early 1960s.

Coke's dividend yield is 2.7%.

Johnson & Johnson (NYSE: JNJ) is among the world's largest and most diversified healthcare companies, producing branded drugs, medical devices, and consumer healthcare brands like Tylenol, Band-Aid, and Listerine. (Note that the company is planning to spin off the consumer brands into a new public company in 2023.)

Johnson & Johnson has a strong balance sheet and a history of healthy revenue growth. The company's been increasing its dividend for more than 60 years, and the annual dividend of $4.52 produces a yield of about 2.6%.

ALSO READ: Could Johnson & Johnson Stock Help You Retire a Millionaire?

It's likely you have Procter & Gamble (NYSE: PG) products in your bathroom or laundry room. The company makes Charmin toilet paper, Gillette razors, and Tide detergent -- plus another five dozen recognizable household brands.

The diversity of the company's product line, the strength of the brands, and the overall focus on household essentials contribute to sustainable revenue and net income growth.

Its dividend yield is about 2.5%, thanks to total annual dividend payments of $3.65 per share. The company has increased its dividend for 66 years consecutively.

As of March 31, Apple (NASDAQ: AAPL) made up 42% of Berkshire Hathaway's stock portfolio. That's a risky allocation for most investors, but also a sign of Buffett's positive view on the iPhone maker.

Apple's dividend yield is fairly low at about 0.5%. The good news is that the payout ratio is also quite low at 15%. Apple has been increasing its dividend for 11 years consecutively.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Bank of America (NYSE: BAC) provides commercial and consumer banking and wealth and asset management services. The bank has a strong presence domestically but also operates in more than 30 countries worldwide.

Its dividend yield is about 2.5%. A healthy payout ratio of 26% is one indication that the dividend is sustainable.

Bank of America does not have a lengthy history of annual dividend increases like some of the other stocks in our list. Its quarterly dividend dropped from $0.64 per share in 2008 to $0.01 per share in 2009, a consequence of the 2008 financial crisis. The quarterly dividend today is $0.22 per share.

ALSO READ: Why Shares of Bank of America Are Rising Today

U.S. Bancorp (NYSE: USB) runs a regional banking operation and a global payment services business. The bank has long been a leader among its peers in operational efficiency, which produces strong returns on equity. That's likely one reason why Berkshire Hathaway has owned this banking stock since 2006.

U.S. Bancorp's dividend yield is 3.9%, and the payout ratio is 42%. The bank has increased its shareholder payout for 11 years consecutively to reach the current annual total of $1.84 per share.

Citigroup (NYSE: C) is the third and final bank stock on our list of Buffett dividend payers. The global bank has 200 million customers worldwide, across 160 countries. The customer mix includes consumers, governments, and institutions that use Citigroup's banking, credit, transaction, and wealth management services.

Citigroup stock yields nearly 4%, thanks to total annual payments of $2.04 per share. The payout ratio of 26% is low, but the bank hasn't increased its dividend since 2019.

ALSO READ: Citigroup Is Now a Warren Buffett Stock

Buffett first bought shares of Occidental Petroleum (NYSE: OXY) earlier this year and has been steadily increasing his position since. In an interview with CNBC, the billionaire said he liked the way Occidental CEO Vicki Hollub was running the company.

Occidental is an oil and gas explorer, developer, and producer. The company also makes and sells chemicals like chlorine and vinyl.

Its dividend yield is modest at 0.9%. And that's after the company raised its quarterly dividend from $0.01 to $0.13 earlier this year.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

STORE Capital (NYSE: STOR) is a real estate investment trust, or REIT, the only one on our list. REITs own and manage rent-generating real estate. They also distribute 90% of their income to shareholders and, in return, get to sidestep corporate income taxes.

The real estate portfolio includes nearly 3,000 properties that are leased out to service, retail, and manufacturing businesses throughout the U.S. The company has a good record of keeping its occupancy rate at 99% or higher.

Its dividend yield is strong at 5.51%. Note that Buffett did reduce his position in the company substantially in the first quarter of this year.

ALSO READ: This REIT Sees a $3.9 Trillion Opportunity Open for the Taking

Buffett isn't a dividend investor per se. Nor is he immune from investing mistakes. Still, his record proves that he's right about a company's long-term potential more than he's wrong. So a review of the stocks he rolls into Berkshire Hathaway's portfolio is one way (of many) to search for solid, investable businesses that pay dividends.

Do your research, pick the dividend payers that fit your risk tolerance and goals, and start building your passive income machine today.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Catherine Brock has positions in Coca-Cola, Johnson & Johnson, and Procter & Gamble. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway (B shares), and STORE Capital. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.