Warren Buffett’s Dividend Gems: 2 High-Yield Stocks Worth a Closer Look
Though Warren Buffett’s Berkshire Hathaway isn’t strictly a dividend-focused investor, many of the companies in its portfolio pay solid dividends. That’s because Buffett tends to invest in financially strong businesses with durable competitive advantages, sound capital allocation, and the potential for long-term value creation. As a result, some of these holdings are particularly attractive to income-focused investors—especially in the current market climate.
Today, two dividend-paying stocks in the Berkshire Hathaway portfolio stand out for their high yields and resilient fundamentals:
️ 1. Chevron (CVX): A Strong Energy Dividend Play
Chevron, the U.S. oil and gas giant, offers a generous dividend yield that income investors may find appealing.
• Economic Moat: Morningstar gives Chevron a narrow moat rating, citing confidence in its ability to earn strong returns on invested capital over the next decade.
• Why It Matters: This is due to an improved cost structure and investments in higher-return production volumes.
• Capital Discipline: Chevron’s management has demonstrated exceptional capital allocation—a quality Buffett highly values.
• Dividend Outlook: There is still room to grow the dividend based on the company’s strong cash flows.
• Fair Value Estimate: Morningstar values Chevron at $155 per share, suggesting upside potential from current prices.
2. Kraft Heinz (KHC): A Buffett-Favorite with Steady Income Potential
Berkshire Hathaway owns more than 26% of Kraft Heinz, making it one of the firm’s most significant equity investments.
• Familiar Brands, Stable Income: Kraft Heinz owns iconic names such as Oscar Mayer, Philadelphia, and Kraft, which give it a narrow economic moat due to brand strength and consumer loyalty.
• Strategic Turnaround: The company has shifted its focus toward profitable and consistent growth, with stronger financial discipline.
• Dividend Growth Outlook: Morningstar expects mid-single-digit dividend increases annually over the long term.
• Fair Value Estimate: Kraft Heinz is valued at $51 per share, making it a potential bargain for income investors looking for brand-backed stability.
Investor Takeaway
Even though dividend yield isn’t Buffett’s primary investment screen, the presence of strong-yielding stocks like Chevron and Kraft Heinz in the Berkshire portfolio shows that quality companies with sustainable cash flows naturally reward shareholders. For income-oriented investors, these two names offer a rare combination of:
• Competitive advantages
• Solid dividend yields
• Potential for capital appreciation
Though Warren Buffett’s Berkshire Hathaway isn’t strictly a dividend-focused investor, many of the companies in its portfolio pay solid dividends. That’s because Buffett tends to invest in financially strong businesses with durable competitive advantages, sound capital allocation, and the potential for long-term value creation. As a result, some of these holdings are particularly attractive to income-focused investors—especially in the current market climate.
Today, two dividend-paying stocks in the Berkshire Hathaway portfolio stand out for their high yields and resilient fundamentals:
️ 1. Chevron (CVX): A Strong Energy Dividend Play
Chevron, the U.S. oil and gas giant, offers a generous dividend yield that income investors may find appealing.
• Economic Moat: Morningstar gives Chevron a narrow moat rating, citing confidence in its ability to earn strong returns on invested capital over the next decade.
• Why It Matters: This is due to an improved cost structure and investments in higher-return production volumes.
• Capital Discipline: Chevron’s management has demonstrated exceptional capital allocation—a quality Buffett highly values.
• Dividend Outlook: There is still room to grow the dividend based on the company’s strong cash flows.
• Fair Value Estimate: Morningstar values Chevron at $155 per share, suggesting upside potential from current prices.
2. Kraft Heinz (KHC): A Buffett-Favorite with Steady Income Potential
Berkshire Hathaway owns more than 26% of Kraft Heinz, making it one of the firm’s most significant equity investments.
• Familiar Brands, Stable Income: Kraft Heinz owns iconic names such as Oscar Mayer, Philadelphia, and Kraft, which give it a narrow economic moat due to brand strength and consumer loyalty.
• Strategic Turnaround: The company has shifted its focus toward profitable and consistent growth, with stronger financial discipline.
• Dividend Growth Outlook: Morningstar expects mid-single-digit dividend increases annually over the long term.
• Fair Value Estimate: Kraft Heinz is valued at $51 per share, making it a potential bargain for income investors looking for brand-backed stability.
Investor Takeaway
Even though dividend yield isn’t Buffett’s primary investment screen, the presence of strong-yielding stocks like Chevron and Kraft Heinz in the Berkshire portfolio shows that quality companies with sustainable cash flows naturally reward shareholders. For income-oriented investors, these two names offer a rare combination of:
• Competitive advantages
• Solid dividend yields
• Potential for capital appreciation