The Top Dividend Stocks from Warren Buffett and Berkshire Hathaway

Warren Buffett
Warren Buffett

Berkshire Hathaway Inc. (NYSE: BRK-A) has been actively watched in the news of late. After its participation in the $28 billion acquisition of H.J. Heinz Co. (NYSE: HNZ), this does change the landscape a bit for Warren Buffett and his team. Last week we got the first look at the Berkshire Hathaway public stock holdings for 2013. With Berkshire Hathaway shares among those giants hitting all-time highs, his dividend picks may matter more than usual.

24/7 Wall St. follows Warren Buffett closely, and we also follow dividend investing closely. Every Buffett follower knows that the Oracle of Omaha is a huge fan of dividends as a way to create income and new capital off of the existing base for the Berkshire Hathaway empire. We wanted to see which of Buffett's stocks had the highest dividend yields so that investors can decide if they want to perhaps cherry-pick from his holdings.

It is interesting that H. J. Heinz Co. (NYSE: HNZ) as the newest buyout offers up a 2.9% dividend yield. That is based on the new price rather than on the pre-merger price. That is also with shares at an all-time high.

ConocoPhillips (NYSE: COP) was a 24.1 million-share stake in the latest holdings, worth close to $1.4 billion based on today's price. This is a decent size for a Buffett stake, but not an all-in bet. The dividend yield here is close to 4.5%.

Gannett Co. Inc. (NYSE: GCI) is a very small position at 1.74 million shares. While this was a static size, it is much lower than in years past. Investors may pan the world of "old media" names, but this stock recently hit a 52-week high. Its market cap of $4.6 billion is also a small stock for Buffett. What stands out is that 4% dividend yield offered by Gannett, and investors need to understand that this high dividend yield is with shares trading at highs going back almost five years.

We did not include the General Electric Co. (NYSE: GE) yield of 3.2% due to the size of the stake being less than 600,000 shares. We noted before that the team's stake here is so small that they should just unload the rest of it.

GlaxoSmithKline PLC (NYSE: GSK) is a relatively small stake at 1.51 million ADRs, but its dividend screens out at close to 6%. Another ADR that is a larger stake is Sanofi S.A. (NYSE: SNY) at 4.06 million shares, and its dividend yield screens out at about 3.5%.

Johnson & Johnson (NYSE: JNJ) is one of those more than 3% yields that is hard to get excited about for Buffett trackers. It is not that the stock is challenging all-time highs, nor that the manufacturing woes have been a thorn here. What puts Buffett trackers off is that Berkshire Hathaway has trimmed this stake down to about 327,000 shares after having held a massive stake in prior years.

Kraft Foods Group Inc. (NASDAQ: KRFT) is a high-yield position, but Buffett seems to be more focused on the Mondelez International Inc. (NASDAQ: MDLZ) stake as a new position. Kraft is now only 1.67 million shares, and Mondelez is 12.84 million shares. The difference is that the legacy Kraft pays a dividend of about 4.2%, versus only about 1.9% from Mondelez.

Unfortunately, some of the companies mentioned here were also among the stocks that we think Mr. Buffett needs to sell soon.

There are many runner-ups here for the 3% dividends. Buffett has owned some of these long enough that Berkshire Hathaway has a yield of 3% even if new investors based on today's prices will get a tad less. These "almost 3% yields" are as follows:

  • The Coca-Cola Co. (NYSE: KO) at 2.7%

  • M&T Bank Corp. (NYSE: MTB) at 2.6%

  • Procter & Gamble Co. (NYSE: PG) at 2.9%

  • Wells Fargo & Co. (NYSE: WFC) is a mega-Buffett stake (more than $16 billion today) with a yield of about 2.8%.

Filed under: 24/7 Wall St. Wire, Buffett, Conglomerates, Corporate Governance, Dividends & Buybacks, Personal Finance Tagged: BRK-A, BRK-B, COP, GCI, GE, GSK, HNZ, JNJ, KO, KRFT, MDLZ, MTB, PG, SNY, WFC