Unlocking Buffett's $375 Billion Portfolio: The Power of Dividend Investments

As Warren Buffett once said, "All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies."

Fortunately for the rest of us regular investors, Berkshire Hathaway's financial resources are not required to distinguish between companies that are a good investment and those that are best avoided. Simply seek out dividend payers who consistently increase their dividends.

The great majority of the stocks that Berkshire Hathaway owns pay dividends, despite the company not paying one itself. The bulk of Berkshire's assets are concentrated in a small number of dividend-paying businesses since Buffett is such a huge lover of dividend payers. You may be shocked to hear that 57.7% of Berkshire's stock portfolio consists of only two equities at current pricing.

Although Buffett has led Berkshire since 1965, one of the company's largest-ever investments didn't make its way into the stock portfolio until 2016. Back then, Berkshire started amassing a sizable position in Apple, which has grown rapidly to become the conglomerate's largest investment.

Since Berkshire declared its interest in Apple at the conclusion of the first quarter, the company's stock price has increased by an astounding 627%. In addition, throughout the same period, its quarterly dividend distribution increased by around 68%.

At current pricing, Berkshire's position in Apple is a remarkable $181 billion, or almost 48% of the company's equity portfolio, thanks to huge profits and subsequent acquisitions. At current prices, the stock yields an unimpressive 0.5%, but since Buffett owns around 915 million shares of the company, quarterly distributions are noteworthy.

Dividend payments from Berkshire's Apple holdings will total $220 million in February, and there may be further payments in the upcoming quarter. Just 15% of the roughly $100 billion in free cash flow that the incredibly profitable corporation produced in the last 12 months was required to satisfy its dividend obligation.

For at least another ten years, Apple is expected to continue generating growing profits and paying out dividends to new investors who choose to follow Buffett's example.

Although Apple claims to have more than 2 billion active devices, iPhone sales aren't increasing all that quickly. In its fiscal fourth quarter, which concluded on September 30, sales of high-margin services to those consumers increased earnings per share by 13%.

Why Warren Buffet Continues to Bet Big on BofA

More than one billion shares of Bank of America, often known as BofA, are held by Buffet. It represents the second-largest asset for Berkshire with 9.3% of the stock portfolio.

Buffett has been expressing his belief in the potential for the U.S. economy to develop over time to everyone who would listen for decades. He knows that these cyclical industries profit from times of economic expansion that often endure far longer than the recessions that divide them, which is why he loves to purchase bank stocks after they have been knocked down.

In 2023, BofA's loan interest income increased far more quickly than the interest it paid to its sizable deposit base. Earnings per share increased 11% year over year in the third quarter because to an enhanced net interest margin.

BofA shares provide a 2.8% dividend return at current levels, with the potential to earn considerably more on your initial investment in the years to come. The bank maintained its dividend in 2020, although during the previous five years, it has increased by 60%.

BofA only needed 20.7% of the free cash flow generated by its profitable banking sector to meet its dividend requirement during the previous 12 months, despite all the recent fast payout spikes. This implies that there is ample opportunity to increase the dividend significantly in the upcoming years. It seems like a wise decision to purchase the stock now and keep it for the long term.