Buffet Set to Reap Over $1.33 Billion from Two High-Dividend Stocks through Investments This Year
Bold and Brash: Buffett's Billion-Dollar Dividend Double-down
Warren Buffett, the notorious investing maestro, has never been one to shy away from a challenge. Even his esteemed company, Berkshire Hathaway, has never coughed up a dividend, with Buffett preferring to re-invest capital for bigger returns. But don't mistake his refusal to pay a dividend as an aversion to collecting passive income. In fact, this year, Berkshire will rake in over $1.3 billion from two favourite stocks generating just such income.
Gusher of Greenbacks - Chevron: $811 Million Annual Dividends
Buffett has had an eye for U.S. oil and energy producers of late, and his latest target is Chevron (CVX -0.41%). Despite the oil prices remaining stubbornly low, Buffett's bullish on the oil and gas game. Berkshire has purchased a whopping 118.6 million shares of Chevron, which accounts for nearly 6% of Berkshire's portfolio. Not too shabby for a company that's Berkshire's fifth largest equity holding.
Chevron's been dishing out a quarterly dividend of $1.71 per share for the first half of the year, which boasts a decent dividend yield of around 5%. If they keep it up and Berkshire maintains its stake, the dividends will total close to $811.3 million this year.
The Texas-based energy titan has a commendable dividend history, with 2025's first quarter free cash flow slightly under par at $1.3 billion. That said, after excluding the volatile working capital, the free cash flow rocketed to a robust $3.7 billion, more than enough to cover the $3 billion dividends paid out in the quarter. Better still, management's already planning on additional $10 billion in free cash flow next year, assuming oil prices reach $70 per barrel. And guess who won't complain about that?
This extra free cash flow, coupled with the pledge to prioritize the dividend over share buybacks, signals that Chevron's dividend is set to shine on. Even if the oil prices take a dive, management would cut back on share buybacks before considering a dividend cut. Now, that's what you call a solid investment!
Krafty Moves - Kraft Heinz: $521 Million Annual Dividends
Buffett's got a long history with Kraft Heinz (KHC -0.66%). The conglomerate teamed up with a Brazilian private equity firm back in 2013 to purchase Heinz for a cool $23 billion. After overseeing a merger with Kraft in 2015, the result was Kraft Heinz, a force to be reckoned with. However, the stock has taken a beating over the years, making some wonder if it'll go down as one of Buffett's worst investments ever.
Some analysts even speculate that Berkshire might unload some of its position in Kraft Heinz, with Berkshire's representatives on the board set to leave and Kraft Heinz evaluation strategic alternatives - sell-offs perhaps?
But back to the dividends. Kraft Heinz has been shelling out dividends for the last decade, although they did take a hit in 2019 to pay off debt. Still, the dividend yield is an impressive 6%. If Berkshire maintains its current stake of over 325.6 million shares, the company's set to collect a tidy sum of over $521 million in dividends this year.
Kraft Heinz's free cash flow yield is an enticing 9.5%, and analysts predict $2.63 free cash flow per share this year - easily enough to cover the expected $1.60 per share in dividends. While it's not the most exciting stock, these strategic alternatives just might unlock some hidden value - and with the dividend looking safe right now, the wait may well be worth it.
The Bottom Line
Buffett's investments in Chevron and Kraft Heinz, despite their past performance, are all about that reliable dividend income and long-term growth potential. Chevron's mix of traditional energy and new opportunities, coupled with its strong dividend track record, make it a lucrative investment. Kraft Heinz's stable consumer brand presence, even amid challenges, has Buffett's long-term view focused on recovery and cash generation. In short, if you're looking for a steady stream of income with a dash of excitement, these stocks might just be your golden ticket. Just remember, as Buffett always says, invest in what you know and hold on for the long haul.
Warren Buffett's Berkshire Hathaway, through its investments in Chevron and Kraft Heinz, is seeking reliable dividend income and long-term growth potential. Chevron, with its mix of traditional energy and new opportunities, and a strong dividend track record, is expected to generate over $811 million in dividends this year. Kraft Heinz, despite past performance, offers a stable consumer brand presence, expected to generate over $521 million in dividends this year, due to its high dividend yield. These stocks provide a steady stream of income with a dash of excitement for investors looking to hold on for the long haul.
