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Warren Buffett's Dividend Picks

This post was updated on April 30, 2010

Goldman Sachs and derivatives will likely be hot topics of conversation this weekend when Warren Buffett and Charlie Munger field questions at the love-fest that is the Berkshire Hathaway (BRK-B) annual shareholder meeting. There is always some good learning and good chuckles at the Q&A session. But if you're looking for an investing lesson, diving into Buffett's personal portfolio can be even more illuminating.

Thanks to a terrific post at Morningstar you can now delve even closer into the investing mind of the Oracle of Omaha. Robert Miles spent some quality time poring through recent SEC filings and has created a profile of Buffett's personal portfolio. It's a who's who of dividend paying stocks. Retirees (and pre-retirees) looking to generate income outside of the increasingly risky bond market can get some great ideas from Buffett's personal dividend-paying stock portfolio. For that matter, anyone looking for strong returns should take note. According to Ned Davis Research, dividend-growth stocks within the S&P 500 have grown at an annualized 9.4% since 1972. The non-dividend payers within the S&P 500 muddled along at a 1.5% annualized pace over that stretch.

Buffett's Dividend-Paying Stock Portfolio

According to Miles' calculations Buffett's personal holdings generated a 2.3 percent income yield last year. Here's his list of Buffett's dividend payers:

Source: Morningstar

Miles dryly points out that it's this dividend portfolio that offsets the parsimonious $100,000 annual salary Buffett draws from his day job running Berkshire Hathaway. But even an Oracle can take a hit. Cushy as that $42.6 million payout was, Buffett isn't immune to dividend disappointments. Both Wells Fargo and US Bancorp cut their dividends during the financial crisis. Bloomberg estimates Buffett's dividend payouts slid as much as 44 percent from their peak.

Source: Bloomberg

I decided to overlay Buffett's dividend portfolio with Standard & Poor's index of Dividend Aristocrats: an increasingly short list of companies that have managed to raise their dividends for at least 25 consecutive years. If you're looking to ride Buffett's personal coattails, you might want to check out his holdings that also have a long history of not disappointing on the dividend front:

Dividend Aristocrats in Buffett's Portfolio

  • ExxonMobil (XOM) 2.5 percent yield
  • Johnson & Johnson (JNJ) 3.3 percent yield
  • Procter & Gamble (PG) 3.1 percent yield
  • Wal-Mart (WMT) 2.3 percent yield

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