In 3 sentences
- Verizon has a tremendous dividend yield that has increased for 15 straight years.
- Chevron is in excellent financial shape, having paid a dividend for 36 straight years.
- US Bancorp is regularly among the top performers in the banking industry.
During times of volatility, investors can look for stocks with high dividend yields that can lead to stable passive income over time. There aren’t many who know more about dividend stocks than Warren Buffett. About his company Berkshire Hathaway Buffett has invested in more than a few dividend stocks that have helped Berkshire outperform over the years.
Three stocks that are earning Buffett some nice dividend yields are the telecom giant Verizon Communications (WKN: 868402), the major energy producer Chevron (WKN: 852552) and the big bank U.S. Bancorp (WKN: 917523). An investment of $6,000 in Verizon with a dividend yield of about 4.8%, $5,000 in Chevron with a dividend yield of about 3.25%, and $5,000 in US Bancorp with a dividend yield of about 3.4% would return about Generate $3,100 in passive income. Not that bad. Let’s take a look at each of these three stocks.
1. Verizon
Buffett bought Verizon in late 2020 in the midst of the pandemic, at a time when he was selling more than he was buying. Not only does Verizon offer a high dividend yield, but it’s also a classic Buffett stock, trading at under 10 times earnings. Verizon also appears to have some momentum, as the company had a strong quarter, with earnings and revenue beating expectations. The forecasts for this year were also above the expectations of the analysts.
Verizon is making good progress with its 5G wireless initiative, and within that initiative there are some new and exciting business areas where the company appears to be taking the lead. Take Network as a Service (NaaS), a digital subscription that allows users to sync all of their electronics, from an iPhone to an autonomous vehicle. Verizon has now increased its dividend for 15 straight years, making it a very strong dividend stock.
2. Chevron
Chevron is one of the best-performing stocks in Berkshire’s portfolio, having gained more than 40% so far in 2022. This year’s catalyst has been Russia’s invasion of Ukraine, which has boosted oil prices significantly. Since the US and many other countries have banned oil and gas imports from Russia due to the war, and Russia is one of the largest gas exporters, this has made American energy companies very valuable. Chevron is currently trading at an all-time high.
The company is also in good financial shape and has a history of growing free cash flow even as oil prices plummet. Chevron also plans to significantly increase its share buybacks and recently raised its free cash flow guidance through 2026. The company has raised its dividend annually for 36 consecutive years. Given the strong performance this year, it’s certainly fair that investors are wondering if a setback might not be imminent at some point. But Chevron is in very solid financial shape and is a great dividend stock.
3. U.S. Bancorp
Rounding out the group is US Bancorp, one of the largest banks in the US with more than $564 billion in total assets. US Bancorp has survived the massive sale of banks by Buffett and Berkshire during the pandemic and appears to be Buffett’s favorite US regional bank. US Bancorp is a premier commercial bank serving both small businesses and larger corporations through its unique payments business that sets it apart from its competitors. In the coming years, US Bancorp plans to unify and further integrate its payments and commercial banking products.
Since 2010, US Bancorp has consistently delivered high annual returns on equity in excess of 14%. That’s a good indication of how much money the company has made from shareholders’ equity. US Bancorp is a consistent dividend payer and has consistently increased its dividend since 2010. The bank is regularly among the top performers in the industry.
The item Goal: $3,000 in passive income Method: Invest $16,000 in these 3 Warren Buffett dividend stocks and wait 5 years appeared first on The Motley Fool Deutschland.
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Bram Berkowitz does not own any of the stocks listed. The Motley Fool owns shares of shares of and recommends Berkshire Hathaway and recommends Verizon Communications. This article was published on April 9, 2022 at Fool.com and has been translated for our German readers.
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