Warren Buffett continues to hold a dividend program for Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) . But there is no doubt that the legendary investor likes dividends. He even noted in the letter to shareholders last year that Berkshire made a $ 3.7 billion dividend payment in 2017.
Not all Buffetts shares pay dividends, but many of them do. What are the best dividend stocks in Buffetts' portfolio for investors to consider buying in February? Here's why Apple (NASDAQ: AAPL) Johnson & Johnson (NYSE: JNJ) and Big Capital (NYSE: BIG) looks like good picks.
Warren Buffett has not always been a technology store fan. But he is bitten into Apple in a big way. It is now the largest holding in Berkshire Hathaway's investment portfolio.
Apple pays a dividend yielding 1.72% today. The company's dividend payout has almost doubled since 2012. Apple should have no problems at all and keep dividends afloat. The payout ratio is super low at 23%, and the company has a cash stock of over $ 86 billion.
Some investors have been leaking on Apple lately, but not Buffett. Oracle of Omaha does not seem too concerned about the company's headwinds in China and slower adoption for its latest iPhones, factors that caused Apple to beat its fourth quarter revenue guidance in January. Buffett continues to believe in the long-term value of Apple's ecosystem.
2. Johnson & Johnson
Buffett and Berkshire have long owned Johnson & Johnson. However, he sold most of Berkshire's stake in healthcare in 2012. Since mid-2012, J & J has delivered a total return of almost 140%.
An important part of Johnson & Johnson's attraction is the dividend. The company has paid dividends every quarter in 56 consecutive years. Its dividend yields 2.72% today.
J & J faces some challenges. The company's stock fell more than 10% on a day in December after Reuters published a report claiming that J & J may have known for years that baby powder and other talc products were contaminated by asbestos. The company's growth has also slowed considerably with the best-selling drugs Remicade is fighting biosimilar competition. But J & J's strong cash flow will enable the company to make acquisitions and deals to keep it a favorite investor for a long time to come.
3. Big Capital
Berkshire Hathaway owns only a real estate investment fund (REIT) – and it's Big Capital. The company focuses on real estate brokerage where tenants are under lease agreements that require them to cover property taxes, building insurance and maintenance.
As a REIT, Store Capital must distribute at least 90% of its taxable income to shareholders in the form of dividends. That's exactly what it has done for years, with the dividend now reaching over 4%.
Although many dealers are struggling with the growth of e-commerce, large-scale tenants make it pretty good. That's because REIT's customer base includes many businesses that are not as vulnerable to internet competition, including restaurants, cinemas, and health clubs. Store Capital continues to grow its bottom line and dividend – just what Buffett likes to see with a stock.
If you are primarily looking for income, Store Capital is the best choice among these three Warren Buffett dividend shares. It has the highest dividend yield now, and it will probably be long.
However, I think Apple is the best overall choice. The company's services are growing nicely. As high-speed 5G networks become more widespread, Apple's sales of new iPhones should be boosted. And the company's initiatives in magnified reality, self-driving cars and video streaming can provide significant new sources of revenue in the future.
It's no wonder that Buffett has made Apple number 1 in the Berkshire portfolio.
Keith Speights owns shares of apple The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). Motley Fool owns shares in Johnson & Johnson and has the following options: long January 2020 $ 150 calls on Apple and short January 2020 $ 155 appeals to Apple. Motley Fool has an information policy.