Like most of the investing world, Warren Buffett thrives on dividends. The veteran financier and leading light of Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) receives plenty of them; in the second quarter, for example, Berkshire was set to reap nearly $900 million in such payouts.
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Although Buffett prefers that the companies under Berkshire's wing reinvest their profits into growing their respective businesses rather than paying dividends, he is fond of getting such distributions from his stocks.
The proof of this sentiment is in Berkshire's top two dividend yielders, both of which pay out handsomely. Here are a few words about this generous duo.
Cellphone provider Verizon (NYSE: VZ) is no longer an important position for Berkshire Hathaway. Following a big sell-off earlier this year, Buffett's conglomerate held only 928 shares as of the end of June.
That makes it Berkshire's lightest holding in terms of share count, by far (it holds over 59,000 shares of the next-lightest, UPS). Funnily enough, Verizon is the stock that yields the most (4.8%) in the company's immense portfolio.
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Although Berkshire won't benefit much from owning such a modest amount of its stock, the big telecom -- half of what is effectively a duopoly, along with AT&T, atop its industry -- certainly still has much potential.
The company has invested heavily on content, buying AOL in 2015 and Yahoo! the following year to create the Oath media unit. This should make its offerings more attractive for subscribers, and its service "stickier."
It also delivered an impressive second quarter, thanks in no small part to a new unlimited plan, which helped rope in thousands of new customers. Finally, it's working hard to develop its Internet of Things offerings, a potentially thick revenue stream.
That potential should keep the market very interested in the stock and support its price. This will be aided enormously by the dividend, which should be at least sustainable given that the company's latest quarterly payout ratio was 60%.
STORE Capital (NYSE: STOR) was plucked from relative obscurity to stock stardom after Berkshire revealed earlier this year that it bought nearly 10% of the company's shares.
STORE Capital is a real estate investment trust (REIT) that specializes in retail properties. Although it's been an unheralded player in its segment (at least until Buffett got his hands on it), the company does its thing extremely well and knows how to make a buck. Total assets and revenue have risen lately at impressive rates.
This, naturally, filters down into solid bottom-line performance. The company's funds from operations (the most accurate profitability metric for REITs) have also seen a nice climb, rising 30% on a year-over-year basis to more than $72 million in Q2.
STORE Capital's store is very much open for business these days. The company's overall occupancy rate during said quarter was 99.5%, a huge proportion given the high number of properties (1,770) that it manages. On top of that, an aggressive acquisition policy has helped the REIT post those excellent gains, and the new assets coming into the portfolio should continue to aid growth.
To maintain their status as REITs, companies like STORE Capital are required to distribute nearly all of their net profits in the form of dividends. Buffett and his fellow shareholders received $0.29 per share for the quarter, putting the company's yield at just over 4.6% on the most recent closing stock price.
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