Size Up Buffett’s Biggest Dividend Payers

Warren Buffett needs no introduction. Nor does his Berkshire Hathaway (NYSE: BRK.B), one of the most closely followed portfolios in the market.
So we won’t deliver the details of what Buffett’s been buying or selling. That story is well-told. But what I will do is touch on some of Buffett’s highest-yielding stocks.
Everyone loves income, Buffett included. Close to 70% of the stocks that he and Berkshire own pay a dividend. And about 40% of those stocks pay a dividend that’s greater than the average S&P 500 dividend yield of 1.9%.
So, without further ado, here are the three highest-yielding stocks from Buffett’s portfolio:

No. 1 Buffett Dividend: Verizon Communications (NYSE: VZ)

This telecom giant owns 34% of the U.S. mobile market share and is the largest U.S wireless carrier.  It’s an infrastructure-intensive business, but one that’s proven resilient and steady regardless of the economic backdrop . . . hence, the reason it has been paying a dividend for 30 years now, with a streak of eight years of consecutive dividend increases.
Buffett first bought into Verizon about a year ago. He owns 15 million shares and is collecting a $2.20 annual dividend on each share. Its dividend yield is a hefty 4.45%.
As far as growth opportunities, Verizon is looking to launch its own mobile software store. It plans on partnering with other carriers and some hardware manufacturers to build an online store to compete with app stores offered by Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOGL).

No. 2 Buffett Dividend: Sanofi SA (NYSE: SNY)

Sanofi is the drug maker headquartered in France. Its stock is in the red for the last year, down 4%, after falling off a cliff in October. Sanofi’s stock was down nearly 20% in October, just a couple of days after firing its CEO and noting continued weakness in its diabetes business.
Fitting enough, Sanofi is a major component of nearly every ETF tracking the European market. Why’s that relevant? Just last week we noted that many big-name U.S. investors were buying European stocks, including George Soros, Robert Shiller and Wilbur Ross.
Buffett first made Sanofi part of his portfolio back in 2007 and has held a steady position since. He now owns 3.9 million shares and collects an annual $1.62 dividend on each share. The drug maker’s dividend yield is 3.9%, with a streak of 11 years of paying a dividend.
As far as righting its missteps related to its diabetes business, it has choices. With low debt levels, Sanofi could get active in the pharma M&A market in an effort to buy smaller companies with growth opportunities.

No. 3 Buffett Dividend: General Electric (NYSE: GE)

GE truly is an industrial conglomerate, making products like medical equipment, appliances, jet engines and locomotives. Buffett owns 41 million shares, getting a 92-cent annual dividend per share. He’s owned GE since early 2012 and has steadily added to Berkshire’s position each year.
Shares of GE are up just 4% over the last year, while the S&P is up over 14%. Part of the reason for the lackluster performance has been GE’s exposure to the oil industry. Any stock remotely oil-related has felt the selling pressure due to the collapse in oil prices. During the fourth quarter, its oil and gas segment revenues accounted for 12% of its total revenues.
But there are some positives for Buffett and other shareholders — besides the fact that GE has been paying a dividend for over 50 years. GE is generating about half its revenues from fast-growing emerging markets. The demand for gas turbines and locomotives should continue to remain solid in companies like China and India as they play catch up to more developed nations.
National-Oilwell Varco (NYSE: NOV) and Kraft Foods Group (NASDAQ: KRFT) both get shout-outs for being tied for a close fourth — each offer dividend yields of 3.45%. Shares of National-Oilwell, the oil service company, are down over 35% over the last six months, which partly explains the elevated dividend yield.
Collecting dividends shouldn’t be overlooked.  A strong dividend stock can help protect on the downside. Many stocks like GE still have impressive growth prospects on the back of a strengthening economy.

Making Warren Buffett Green

Since 2010, mega-investor Warren Buffett grew his wealth by an average of nearly 14% each year. Yet over this same period, a small group of investors nearly doubled these returns…tripling their wealth in the process. How? Just by investing in a select group of stocks with one thing in common. Those who understand it can experience life-changing growth.


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