Warren Buffett’s Best Dividend Stocks

When it comes to dividends, Warren Buffett is happy to collect them but not to pay them. His holding company, Berkshire Hathaway (symbol BRK-B), has never paid out any of its profits to shareholders. But when the Oracle of Omaha looks for companies to invest in, he often focuses on businesses that repurchase shares or issue dividends, or both. “Buffett likes companies that return cash to shareholders,” says David Kass, a finance professor at the University of Maryland who owns Berkshire shares and follows Buffett’s moves closely. Investors could do worse than to follow the master’s lead. And if you’re looking for current income, you might want to consider some of Buffett’s favorite dividend-paying stocks:

Start with General Electric (GE, $25.89, yield 3.6%). During the 2008 financial crisis, Buffett pumped $3 billion into GE in the form of preferred stock with a 10% annual dividend to keep the company afloat. From bankruptcy to a recall crisis, General Motors (GM, $37.56, 3.2%) has also faced its share of troubles. But the automaker is on the road to recovery. Buffett must certainly think so. This past holiday shopping season wasn’t a windfall for United Parcel Service (UPS, $101.86, 2.9%). Fourth-quarter profits came in at $1.25 per share, well below analyst expectations of $1.42. The biggest yielder in Berkshire’s portfolio is Verizon Communications (VZ, $49.37, 4.5%). The wireless giant’s payout is more than twice that of the S&P 500.

Source: Kiplinger

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