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Warren Buffett continues to delay the launch of a dividend program for Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B). But there is no doubt that the legendary investor loves the dividends. In his letter to shareholders last year, he even noted that Berkshire had made $ 3.7 billion in dividends in 2017.
Not all Buffett shares pay dividends, but many are. What are the main dividend holdings of Buffett's portfolio that investors might consider buying in February? here's why Apple (NASDAQ: AAPL), Johnson & Johnson (NYSE: JNJ), and Store capital (NYSE: STOR) look like good choices.
Source of the image: The Fool Motley.
1. apple
Warren Buffett has not always been a fan of tech stocks. But he bit into Apple in a major way. It's now the largest holding in Berkshire Hathaway's investment portfolio.
Apple pays a dividend that currently yields 1.72%. The dividend paid by the company has almost doubled since 2012. Apple should have no problem for dividends to continue to flow. Its payout ratio is extremely low at 23%, and the company has a cash stock of more than 86 billion dollars.
Some investors have rushed on Apple lately, but not Buffett. The Oracle of Omaha does not seem to be worried about the headwinds of the company in China and the slow adoption of its new iPhones, factors that have pushed Apple to reduce its revenue forecasts for the fourth quarter in January. Buffett continues to believe in the long-term value of the Apple ecosystem.
2. Johnson & Johnson
Buffett and Berkshire have owned Johnson & Johnson for a long time. However, he sold the bulk of Berkshire's stake in the health giant in 2012. Since mid-2012, J & J has generated a total return of nearly 140%.
A key component of Johnson & Johnson's attraction is its dividend. The company paid a dividend each quarter for 56 consecutive years. Its dividend currently yields 2.72%.
J & J faces challenges. Its stock dropped by more than 10% in December after Reuters released a report stating that J & J had known for years that its baby powder and other talc products were contaminated with asbestos . The company's growth has also slowed considerably, with Remicade, the best-selling drug, fighting against biosimilar competition. However, J & J's large cash flow should allow the company to make acquisitions and transactions, making it an investor favorite for a long time.
3. Store capital
Berkshire Hathaway owns only one real estate investment trust (REIT) – and that is Store Capital. The company focuses on the real estate properties whose tenants are under a lease agreement, which requires them to pay property taxes, building insurance and maintenance.
As an REIT, Store Capital must distribute at least 90% of its taxable income to shareholders in the form of dividends. That's exactly what he's been doing for years, his dividend now yielding more than 4%.
Although many retailers are facing the growth of e-commerce, Store Capital's tenants are doing quite well. Indeed, the REIT's client base includes many businesses that are less exposed to Internet competition, including restaurants, movie theaters, and health clubs. Store Capital continues to grow its bottom line and dividend – exactly what Buffett likes to see with a stock.
Best choice?
If you're looking for revenue, Store Capital is the best choice among these three Warren Buffett dividend stocks. It offers the highest dividend yield currently and will likely be for a long time.
However, I think that Apple is the best overall choice. The services of the company are developing well. While 5G broadband networks are becoming widespread, sales of new iPhones by Apple should increase significantly. And the company's initiatives in augmented reality, self-driving cars and video streaming could generate significant new revenue streams in the future.
It is no wonder that Buffett made Apple the top position in the Berkshire portfolio.
Keith Speights owns shares in Apple. Motley Fool owns shares and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool owns shares of Johnson & Johnson and offers the following options: $ 150 long calls on Apple to January 2020 and $ 155 short calls on Apple to January 2020 Motley Fool has a disclosure policy.
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