Warren Buffett, a luminary in the investment world, has been dispensing wisdom throughout his illustrious career. A fervent advocate of value investing in well-managed, large-cap equities, Buffett emphasizes the importance of making money even while you sleep, stating, “If you don’t find a way to make money while you sleep, you will work until you die.”
For those seeking to generate passive income, investing in high-quality dividend stocks, especially those categorized as dividend aristocrats, can offer a robust financial cushion for retirement and additional earnings. These stocks, with a history of consistent dividend payouts, become a reliable income source during market turbulence and economic uncertainties.
Ranked as the fifth wealthiest individual on Forbes’ real-time billionaires list, boasting a net worth of $114 billion, Buffett stands as a staunch supporter of industry-leading blue-chip stocks.
In Buffett’s own words, “Beware the investment activity that produces applause; the great moves are usually greeted by yawns.”
Explore some of Warren Buffett’s most trusted dividend-paying stocks:
1. Coca-Cola Co. (NYSE: KO)
Buffett considers dividend stocks as the “secret sauce” behind Berkshire Hathaway Inc.’s success. In Berkshire Hathaway’s 2022 shareholder letter, he highlighted Coca-Cola Co., stating, “[Dividend] growth occurred every year, just as certain as birthdays.” Back in 1994, Buffett and Charlie Munger invested $1.3 billion in Coca-Cola, acquiring 400 million shares. By 2022, annual dividends from these shares surged to $704 million, marking an impressive 800% rise in less than three decades. The value of Berkshire Hathaway’s stake in Coca-Cola reached $25 billion in 2022, representing a staggering 1,800% increase from the initial investment.
2. American Express Co. (NYSE: AXP)
Similar gains were made from Buffett’s investment in American Express Co. In 1995, he invested nearly $1.3 billion, and the investment is now valued at $22 billion, indicating a remarkable 1,600% rise in valuation. Beyond capital gains, Buffett received a dividend income of $302 million from his American Express holdings in 2022, a substantial increase from the initial $41 million in 1995. In Berkshire Hathaway’s 2022 shareholder letter, Buffett expressed confidence that American Express dividend checks were likely to increase. American Express shares also constitute nearly 5% of Hathaway’s net worth.
3. Apple Inc. (NASDAQ: AAPL)
While Apple Inc. is not conventionally considered a dividend stock, Buffett’s investment strategy has reaped dividends from the tech giant. Holding a nearly 5.8% stake in Apple, Buffett lauds it as a “better business than any we own.” Multiple share repurchases by Apple over the years have made it “costless” for Berkshire Hathaway to increase its Apple stock holdings. Buffett’s dividend income from Apple averaged around $775 million annually as of 2020, according to Berkshire Hathaway’s 2020 shareholder letter. Apple has a dividend growth history spanning 11 consecutive years.
