Dividends the Buffett Way: Stability, Value, and Income

Warren Buffett’s investment strategy has long been studied, admired, and imitated, and for good reason. Under his leadership, Berkshire Hathaway became one of the most successful companies in history, delivering unmatched long-term returns. While Buffett famously avoided paying dividends from Berkshire itself, he has consistently invested in companies that do. 

For income-seeking investors, understanding how and why Buffett chooses dividend stocks offers valuable insight into building a resilient, rewarding portfolio. 

Warren Buffett and Berkshire Hathaway have never paid a dividend, believing capital is better reinvested for long-term growth. But that hasn’t stopped Buffett from investing heavily in dividend-paying companies. Most of Berkshire’s $276 billion equity portfolio is built on them, a sign of Buffett’s belief in mature, stable businesses that reward shareholders. 

As he steps down as CEO at the end of 2025, Buffett leaves behind a legacy marked by a 5,502,284% return since taking over. His top three holdings, Apple, American Express, and Coca-Cola, make up nearly half the portfolio and reflect his trademark value-driven, income-friendly approach. In 2024 alone, Berkshire Hathaway earned $5.2 billion in dividend income.

• Apple (21.4%) is Berkshire’s largest holding. Since 2016, it has become a core investment thanks to its loyal user base, product ecosystem, and growing AI strategy. Its dividend yield is just 0.5%, but steady annual increases show a strong commitment to shareholders.
  • Apple recently raised its quarterly dividend and is expected to maintain this level for at least the next three quarters. The company typically pays in February, May, August, and November, with the last day to trade (LDT) usually falling in the same month. 

• American Express (15.9%) is Buffett’s favorite financial stock. Its premium brand, affluent customer base, and solid growth, especially among younger users, make it a standout. The dividend yields 1% and is reliable and growing. Like Apple, American Express also recently increased its quarterly dividend and is expected to pay the same for the next three quarters.
  • It pays dividends in February, May, August, and November, but its LDT typically falls about a month before payout, so to qualify for the August dividend, shares should be purchased by early July.

• Coca-Cola (10.2%) is Buffett’s longest-held position. Known for its global brand and local production model, it thrives even in uncertain times. A Dividend King with 63 consecutive years of payout increases, it currently yields 2.7% - a cornerstone of dependable income. Coca-Cola is expected to maintain its current dividend for the next two quarters before a potential increase.
  • The company pays quarterly in April, July, October, and December, with the LDT about a month before the payout, meaning investors would buy in September to qualify for the October dividend.

While Buffett chose reinvestment over dividends at Berkshire, he built a portfolio centred on companies that do pay them, balancing growth, stability, and passive income in true Buffett fashion. 

A track record of steady growth and disciplined capital allocation often signals a business that could reward shareholders over the long term without sacrificing financial health.

Conclusion

It’s crucial to assess the durability of a company’s competitive advantage. Buffett’s favourite dividend stocks, like Apple, American Express, and Coca-Cola, all have strong brands, loyal customers, and business models that hold up well during economic downturns. Investors may want to prioritise businesses with pricing power, low debt, and leadership that has proven itself through market cycles. Ultimately, dividend-paying stocks are most valuable when they’re part of a broader strategy focused on quality and long-term value.

For those looking to build a dividend income portfolio, subscribing to the weekly update could help. The updates feature companies that pay dividends, along with their upcoming last dates to trade in order to qualify for payouts, making it easier to stay informed and plan ahead. EasyEquities also makes it easy for investors to choose to automatically reinvest the net payout, helping to compound returns over time with minimal effort. To learn more about dividends, check out the free EasyAcademy course on dividends here or below.

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