Warren Buffett Likes These 5 Dividend Stocks
Many investors continue to find comfort in dividend-paying stocks as interest rates remain near historic lows. Dividends can provide a stable source of cash flow that exceeds the rate on bonds or savings accounts, and often help investors lock in returns. Warren Buffett’s Berkshire Hathaway (NYSE:BRKA) hasn’t paid a dividend in decades, but his largest equity holdings are some of the most well-known dividend payers in the market.
The Oracle of Omaha has not paid a dividend since 1967, when Berkshire Hathaway returned 10 cents per share to investors. When asked about the dividend, Buffett simply said, “I must have been in the bathroom when the decision was made.” However, he has provided insightful views on the subject over the years. Buffett believes management should think long and hard about when to retain earnings and when to distribute them to shareholders. As he explained in a past shareholder letter, “Allocation of capital is crucial to business and investment management.”
At this point in time, Buffett believes Berkshire Hathaway should retain its earnings in favor of paying out a dividend. The company is able to put those earnings to better use, and shareholders even receive benefits from Berkshire Hathaway investing in large, stable companies that more often than not pay attractive dividends. In fact, Berkshire Hathaway received $1.4 billion in dividends last year from its top four holdings.
Here’s a look at five Buffett-approved dividend stocks that appear set to return capital to shareholders for many years to come.