Warren Buffett, CEO of Berkshire Hathaway (BRK.A) (BRK.B), has been outperforming Wall Street for the past 58 years. His company’s class A shares (BRK.A) have seen an aggregate gain of over 4,300,000% as of August 18, 2023. Buffett’s success is largely attributed to his strategy of investing in dividend stocks, which are typically time-tested, have clear long-term growth prospects, and are consistently profitable.
According to Berkshire Hathaway’s latest Form 13F filing, Buffett and his team are set to collect over $6 billion in dividend income in the next year. Remarkably, $4.31 billion of this income will come from just five stocks.
Bank of America (BAC), the largest income contributor to Buffett’s portfolio, is set to provide nearly $992 million in dividend income over the next year. Despite economic uncertainty, Bank of America is well-positioned to benefit from the steepest rate-hiking cycle from the Federal Reserve in decades. The bank’s investments in technology, including online and mobile banking, are also expected to boost operating efficiency.
Oil stock Occidental Petroleum (OXY) is another significant income generator for Berkshire Hathaway. The company’s 224 million shares of Occidental common stock and $10 billion worth of preferred stock are set to bring in $161 million and $800 million in annual income, respectively. Occidental’s revenue primarily comes from drilling, and the company stands to benefit from the tight global supply of crude oil.
Apple (AAPL), Berkshire Hathaway’s largest holding, is expected to provide almost $879 million in annual dividend income. Apple’s high-margin subscription services and capital-return program, which has repurchased around $600 billion worth of its common stock since 2013, are key factors in its profitability.
Chevron (CVX), an integrated oil and gas company, is set to contribute nearly $744 million in annual-dividend income to Berkshire Hathaway. Chevron’s balance sheet and financial flexibility, along with its predictable operating cash flow, make it a strong investment.
Finally, Coca-Cola (KO), with its consistent operating cash flow and effective marketing strategies, is expected to provide $736 million in annual-dividend income. Despite slower growth, Coca-Cola continues to deliver for its shareholders, thanks to its operations in almost every country worldwide and its focus on digital-media channels for advertising.
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