Warren Buffett’s Dividend Powerhouses: Key Stocks Generating Billions for Berkshire Hathaway
Billionaire investor Warren Buffett, known as the Oracle of Omaha, has captivated investors for decades. Since becoming CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) over 60 years ago, he has led the company to an astonishing cumulative return of 5,477,866% by January 8. His remarkable outperforming of the S&P 500 has naturally garnered a massive following.
Buffett’s investment formula places high value on seeking out undervalued companies, focusing on a select number of bright ideas, and maintaining a long-term investment focus. However, an oft-overlooked aspect of his strategy is his preference for dividend stocks—companies that routinely pay out dividends to shareholders. These businesses generally offer stability and promise growth over time.
A report from Hartford Funds titled The Power of Dividends: Past, Present, and Future highlighted that income stocks have more than doubled the average annual return compared to non-dividend payers over the last 50 years (1973-2023), with returns of 9.17% vs. 4.27%.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Within its extensive portfolio, Berkshire Hathaway holds several dividend stocks that are projected to generate a total of $4.5 billion in annual dividends in 2025.
1. Occidental Petroleum: $911,597,004 (including preferred dividend income)
Surprisingly, the top dividend-producing stock within Buffett’s 44-stock, $296 billion portfolio is integrated oil and gas company Occidental Petroleum (NYSE: OXY). With over 264 million shares of Occidental common stock, Berkshire expects to earn approximately $232.5 million in dividends. Additionally, $8.489 billion in preferred stock at an 8% yield is expected to add another $679.1 million, totaling around $911 million for 2025.
Unlike many oil stocks, Occidental’s earnings are heavily influenced by upstream drilling, leading to cash flow that fluctuates with crude oil prices. Interestingly, although Buffett is cautious about companies with high debt, Occidental’s financial situation remains a challenge after its acquisition of Anadarko in 2019.
2. Bank of America: $796,957,680
Despite Buffett reducing his stake in Bank of America (NYSE: BAC) by selling over 266 million shares since July, the bank is still set to produce nearly $797 million in dividends for Berkshire in the new year. Bank of America has thrived during the Federal Reserve’s intense interest rate hikes, which has boosted its net interest income. While rates are now easing, the gradual decreases allow BofA to continue making lucrative loans.
Furthermore, Bank of America has made significant investments in technology, with 77% of households banking digitally as of September. Online banking accounts for 54% of all loan sales, increasing customer convenience while lowering operational costs.
Image source: Coca-Cola.
3. Coca-Cola: $776,000,000
It’s no surprise that Berkshire Hathaway’s longest-held investment since 1988, Coca-Cola (NYSE: KO), ranks among Buffett’s top dividend payers, set to deliver $776 million in annual dividend income. The company has increased its dividend for 62 consecutive years, bolstered by its global presence and well-recognized brand.
Coca-Cola’s ability to reach consumers across the globe and its continuous marketing strategies help it maintain strong sales. Furthermore, it stands out by offering a basic necessity—beverages—ensuring steady cash flow that remains resilient regardless of broader economic conditions.
Chevron has increased its base annual payout for 37 consecutive years. CVX Dividend data by YCharts.
4. Chevron: $773,340,682
Another strong dividend payer is Chemron (NYSE: CVX), which is anticipated to generate over $773 million in dividends for Berkshire Hathaway in 2025. With a track record of increasing its annual dividend for 37 years, Chevron’s operations span upstream drilling as well as midstream and downstream activities, which help stabilize cash flow amidst fluctuating oil prices.
Unlike Occidental, Chevron possesses greater financial flexibility. Capital spending is expected to decrease through 2026, while new projects in the Gulf of Mexico and U.S. shale will drive future revenue growth.
Kraft Heinz, American Express, and Apple: Heavy Hitters in Berkshire Hathaway’s Portfolio
Kraft Heinz: A Resilient Dividend Player
Despite being one of Warren Buffett’s less successful investments, Kraft Heinz (NASDAQ: KHC) continues to provide significant dividend returns. Berkshire Hathaway holds a nearly 27% stake in the consumer-packaged foods company, which is expected to generate over $521 million in annual dividend income for Buffett in 2025.
Kraft Heinz thrives on the basic need for food, similar to Coca-Cola. Although consumers occasionally cut back on non-essential purchases, the demand for food remains steady. The company boasts a diverse lineup of familiar brands and quick meal options, resulting in relatively stable operating performance across various economic situations.
However, Kraft Heinz faces challenges, including a hefty long-term debt of $19.4 billion and high goodwill totaling $28.9 billion that it might struggle to recover. The company is currently trying to rejuvenate interest in its brands to enhance financial flexibility.
American Express: A Solid Income Source
American Express (NYSE: AXP) stands as the second longest-held stock in Berkshire Hathaway’s $296 billion portfolio, initially acquired in 1991. In 2025, the company is forecasted to yield $424.5 million in dividends for Berkshire.
The success of American Express lies in its ability to generate income from multiple streams. It ranks as the third-largest payment processor in the U.S., earning consistent fees from retailers. Additionally, by acting as a lender, AmEx collects interest and annual fees from cardholders, which becomes even more lucrative during times of economic growth.
Moreover, American Express is known for catering to wealthier clients. Individuals with higher incomes typically maintain stable spending habits during economic downturns, which helps the company remain resilient compared to other financial institutions.
Apple’s market-leading share repurchase program has notably reduced its outstanding share count over 11 years. AAPL Shares Outstanding data by YCharts.
Apple: The Jewel in Berkshire’s Crown
As Berkshire Hathaway’s largest holding by market value, Apple (NASDAQ: AAPL) continues to be a wealth generator. Although Buffett has sold 67% of his stake, the remaining 300 million shares are set to deliver $300 million in annual dividends.
Buffett appreciates Apple’s robust capital-return program. Over the past 11 fiscal years, ending in late September, Apple has repurchased more than $725 billion of its shares, reducing its outstanding share count by nearly 43%. This strategy has enhanced the company’s earnings per share and attracted value-focused investors.
Apple’s strong brand presence cannot be overlooked, as it leads the domestic smartphone market. Additionally, its Services segment, which relies on subscriptions, has shown consistent double-digit growth.
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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool recommends Kraft Heinz and Occidental Petroleum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
