Warren Buffett Generates Most of His Dividend Income From These 5 Stocks

Warren Buffett is set to generate more than $6 billion in annual dividend income in the next 12 months. Let’s see how.

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Warren Buffett is among the most popular investors globally. Also called the Oracle of Omaha, Buffett is the CEO of Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB), a diversified company that has exposure to several stocks on Wall Street.

Berkshire Hathaway owns multi-billion-dollar stakes in several dividend-paying companies. Dividend-paying stocks generate consistent profits and allow investors to earn a passive income stream.

In the next 12 months, Warren Buffett is all set to earn a whopping US$6 billion via dividend income. Over 70% of this income will be derived from these five stocks.

Chevron

Berkshire owns 163.5 million shares of energy giant Chevron (NYSE:CVX), which translates to annual dividend payouts of US$928.7 million. Warren Buffett has increased his stake in Chevron by a significant margin over the last year due to rising oil prices.

In fact, he expects oil and gas prices to remain above average in the medium term due to geopolitical tensions and supply chain constraints. But Buffett is not only investing in the medium-term energy price rise. Buffett is a long-time fan of Chevron, which operates midstream and downstream assets, including pipelines.

In the last 10 years, Chevron has increased its dividends by 4.7% annually despite the volatility in commodity prices.

Bank of America

Berkshire Hathaway owns 1 billion shares of Bank of America (NYSE:BAC), allowing the company to generate US$916 million in annual dividends.

Bank stocks are cyclical, and shares of Bank of America have declined by 40% from all-time highs. While banks might underperform during periods of uncertainties, the economy generally expands for a larger amount of time compared to contracting.

Additionally, the company is well poised to benefit from higher interest income on its variable-rate loans in the current environment.

The forward yield offered by BAC stock is close to 3% making it attractive to income-seeking investors.

Occidental Petroleum

Another Buffett favourite in 2022, Occidental Petroleum (NYSE:OXY) will help Berkshire earn more than US$100 million in annual dividend payouts. But Berkshire also owns around US$10 billion worth of preferred stock of the energy company, allowing the company to earn another US$800 million in dividends each year.

Similar to Chevron, Occidental Petroleum is an integrated company, but its operations are focused heavily on drilling.

Apple

Apple (NASDAQ:AAPL) is the largest holding of Berkshire Hathaway and accounts for 40% of the latter’s portfolio. Buffett began buying shares of Apple in 2015 and now has 915.2 million shares of the tech heavyweight worth a staggering US$130.9 billion. Due to its forward yield of 0.66%, Apple stock will generate over US$837 million in annual dividends for Buffett.

Apple is one of the largest companies in the world and continues to expand its ecosystem. Until a few years back, it was a hardware company that sold smartphones, laptops, and tablets. But the Services business is Apple’s fastest-growing segment and a key driver of top-line growth for the tech heavyweight.

Coca-Cola

The final stock on my list is Coca-Cola (NYSE:KO), one of Buffett’s oldest investments. Berkshire owns 400 million shares of the beverage giant, translating to annual dividends of US$704 million. A global brand, Coca-Cola is also recession-resistant and enjoys significant pricing power due to its marketing prowess.

It currently offers investors a dividend yield of 3.23%.

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.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Apple and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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