Warren Buffett Stock Picks for Canadian Dividends

Warren Buffett’s conglomerate isn’t paying dividends but is invested in dividend-paying stocks. His stock portfolio include names such as Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) and Suncor Energy Inc. (TSX:SU)(NYSE:SU). As a value investor, he would most likely be in interested in Enghouse Systems Ltd. (TSX:ENGH).

| More on:
close-up photo of investor Warren Buffett

Image source: The Motley Fool

Billionaire Warren Buffett is the most renowned value investor in contemporary times. Many believe he has the Midas Touch. He makes money in every stock investment. But does he buy shares of companies selling below their intrinsic values only?

The CEO of Berkshire Hathaway personally picks the stocks for his conglomerate. Value investing is the strategy and trademark of Mr. Buffett. He has the penchant for correlating stock prices with a company’s real value. Because he targets undervalued stocks, he’s also regarded as the ultimate bargain hunter.

Buffett owns dividend-paying stocks

When Buffett picks stocks, it doesn’t mean he’s out to buy cheap stocks. Price or value is relative. The objective is to look for companies whose prices are not consistent with their long-term potentials. He would then evaluate further by comparing the price of companies in the same sector.

Once it is determined that the current market value is lower than its real worth, a buy decision is firmed up. The legendary investor knows how to identify stocks that present an opportunity for greater profit. When it comes to dividends, Buffett’s publicly listed conglomerate doesn’t pay dividends.

Despite this self-imposed policy, the investment guru is not against dividend stocks. One interesting scoop is that 68% of his conglomerate’s stock holdings are dividend-paying stocks. Since he is a value investor by heart, I can assume he bought these high-quality investments at reasonable prices.

Winning stocks

Buffett’s stock portfolio matters to investors. They follow his every move as well as the stocks he buys. Restaurant Brands International (TSX:QSR)(NYSE:QSR) has risen in popularity because it was disclosed that Buffett has a substantial stake in this consumer discretionary stock. Obviously, he sees the profitability of RBI’s iconic brands — Tim Hortons, Burger King, and Popeyes.

Canada’s famous quick-service restaurant chain pays a 3% dividend to stockholders. The chain is also expanding its outlets by 54% in the next decade. Expect Buffett to hold on this stock because of its long-term growth potential.

Berkshire Hathaway also bought about 10.75 million shares of Suncor Energy (TSX:SU)(NYSE:SU) last December. The stock is up +13.63% year to date and is projected to increase by 45.4% in the next 12 months. With the 3.65% dividend this energy stock is paying, Buffett would earn quite a windfall.

Enghouse Systems (TSX:ENGH) is not among the names in Buffett’s stock portfolio. But if I’m the billionaire investor, I will keep a close watch over this tech stock. Buffett had no confidence for tech stocks but had a change of heart. In hindsight, he would have purchased Apple early on.

The Canadian tech firm’s net income has been growing for the last three years. The stock pays 1.34% dividend but has yet to reach its potential. Enghouse Systems is also pretty aggressive pursuing growth through acquisitions. Using the company’s profits to acquire other companies is one of Buffett’s philosophies.

Although Buffett’s firm pays zero dividends, he’s not totally against dividends. He advises companies to have clear, consistent, and rationale dividend policies. Otherwise, they would drive away investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple, Berkshire Hathaway (B shares), and RESTAURANT BRANDS INTERNATIONAL INC and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and short October 2019 $82 calls on Restaurant Brands International. Enghouse Systems is a recommendation of Hidden Gems Canada.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »