Warren Buffett’s Holy Grail Investment Strategy

The other day, I revealed why Warren Buffett is so success.  So, if you want to emulate Buffett’s successful, just buy companies that pay dividends and buy back their stock.  Did you know financials almost make up 50% of Berkshire Hathaway’s portfolio.  So if you really want to emulate Buffett’s success, just buy financial stocks.

Berkshire’s 8 biggest positions in financial stocks going back to the third quarter were:

Bank of America Corp. (BAC), $25 billion,

American Express Co. (AXP), $19 billon,

Wells Fargo & Co. (WFC), $18 billion,

U.S. Bancorp (USB), $6.7 billion,

JPMorgan Chase & Co. (JPM), $6.2 billion,

Goldman Sachs Group Inc. (GS), $3.6 billion,

Bank of New York Mellon Corp. (BK), $3.4 billion,

Moody’s Corp. (MCO), $5.1 billion

The word “dividend” tends to have this calm, soothing effect on investors because you know the company offering dividend has a profitable and viable business model so in good times and bad times, you can sleep better at night and dividends act like compound interests if reinvested to grow ones portfolio exponentially.   For example, Wells Fargo and Bank of America are set to bring in more than $1.5 billion in dividend income for Buffett over the next year.  That $1.5 billion is almost 2% of his net worth.

Because I’m on this dividend discovery journey, highest dividend yielding companies within Buffett’s portfolio are the following:

Occidental Petroleum Corporation (8.32% yield), together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States and internationally. The company operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing. 

The Kraft Heinz Company (5.16% forward yield) manufactures and markets food and beverage products in the United States, Canada, Europe, the Middle East, and Africa. Its products include condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products, as well as infant and nutrition products

General Motors Company (4.30% forward yield) designs, builds, and sells cars, trucks, crossovers, and automobile parts worldwide. The company operates through GM North America, GM International, GM Cruise, and GM Financial. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Holden, Baojun, Jiefang, and Wuling brand names

Suncor Energy Inc (4.07% forward yield). operates as an integrated energy company. The company primarily focuses on developing petroleum resource basins in Canada’s Athabasca oil sands; explores, acquires, develops, produces, and markets crude oil and natural gas in Canada and internationally; transports and refines crude oil; markets petroleum and petrochemical products primarily in Canada.

Wells Fargo & Company (3.83% forward yield), a diversified financial services company, provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. It operates through three segments: Community Banking, Wholesale Banking, and Wealth and Investment Management.

STORE Capital Corporation (3.50% forward yield) is an internally managed net-lease real estate investment trust, or REIT, that is the leader in the acquisition, investment and management of Single Tenant Operational Real Estate

United Parcel Service, Inc (3.34% forward yield) provides letter and package delivery, specialized transportation, logistics, and financial services. It operates through three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight.

Phillips 66 (3.20% forward yield) operates as an energy manufacturing and logistics company. It operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S).

Restaurant Brands International Inc (3.05% forward yield). owns, operates, and franchises quick service restaurants under the Tim Hortons (TH), Burger King (BK), and Popeyes (PLK) brand names.

The PNC Financial Services Group, Inc (3.02% forward yield). operates as a diversified financial services company in the United States. The Retail Banking segment offers deposit, lending, brokerage, insurance, and investment and cash management services to consumer and small business customers through a network of branches.  The Corporate & Institutional Banking segment provides secured and unsecured loans, letters of credit, equipment leases, global trade services, as well as foreign exchange, derivative, etc.

The Coca-Cola Company (2.95% forward yield)., a beverage company, manufactures and distributes various nonalcoholic beverages worldwide. The company provides sparkling soft drinks; water, enhanced water, and sports drinks; juice, dairy, and plant based beverages; teas and coffees; and energy drinks.

Dividend stocks offer a number of advantages to investors, but I would say the number one reason is best said by Buffett himself.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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