You and I are happy to get a few hundred dollars in dividends from our stock investments. But you and I aren't Warren Buffett, whose investment vehicle Berkshire Hathaway's (NYSE: BRK-A)(NYSE: BRK-B) equity portfolio collects around $953 million every quarter in shareholder payouts.
$953 million is an awfully large number, even by Berkshire's outsized standards. Let's break it down a little.
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Straight into the coffers
I should note two important things: First, I'm taking my data from Berkshire's latest 13F, the quarterly SEC filing that itemizes its equity portfolio. The latest 13F was a snapshot of the stock lineup as of the end of 2017; some of Berkshire's positions have almost certainly shifted since then. I'm also taking into account only the most recent dividends paid by the component companies, disregarding any subsequent raises.
So going purely by the 13F, Berkshire held positions in 47 stocks. Of that group, almost two-thirds of them -- 35, to be exact -- pay dividends. Which is rich, in a way; for years Buffett has resisted calls for Berkshire to hand out a dividend (for reasons I think are sound), yet he's happy to collect payouts from portfolio companies.
But more on this in a moment, because we're getting to the fun part: Where is Berkshire drawing most of its dividend dosh from?
Four companies collectively provide 67% of that $953 million-plus. Not surprisingly, No. 1 is food industry giant Kraft Heinz, ringing in quarterly payouts that top $203 million. The lack of surprise is because Berkshire holds a nearly 27% stake in the company with over 325 million shares. Also, Kraft Heinz's per-share payout is almost $0.63, well above the amounts most other Berkshire dividend stocks dispense.
|Stock||Ticker||Number of shares owned||Dividend per share||Total payout|
|Kraft Heinz||(NASDAQ: KHC)||325,634,818||$0.625||$203,521,761|
|Wells Fargo||(NYSE: WFC)||458,232,268||$0.39||$178,710,585|
|Bank of America||(NYSE: BAC)||679,000,000||$0.12||$81,480,000|
|American Express||(NYSE: AXP)||151,610,700||$0.35||$53,063,745|
|Phillips 66||(NYSE: PSX)||45,689,892||$0.70||$31,982,924|
|U.S. Bancorp||(NYSE: USB)||87,058,877||$0.30||$26,117,663|
|General Motors||(NYSE: GM)||50,000,000||$0.38||$19,000,000|
|Delta Air Lines||(NYSE: DAL)||53,110,395||$0.305||$16,198,670|
The remaining three are also the only other portfolio components contributing more than $100 million per quarter in dividend payouts. These are longtime Buffett favorites Wells Fargo at almost $179 million, and Coca-Cola (NYSE: KO) with $156 million. Bringing up the rear is a newish favorite, Apple, pumping out a quarterly stream of $104 million.
Broadly speaking, the remainder is pretty well scattered among the remainder of that 35. Long-standing Berkshire stock positions are represented, such as American Express, contributing just over $53 million. There are a number of relative newcomers, too: Southwest Airlines, with a relatively small $6 million, is on the list, as is REIT Store Capital at nearly the same amount.
|Stock||Ticker||#shares owned||Dividend per share||Total payout|
|Bank of New York Mellon||(NYSE: BK)||60,818,783||$0.24||$14,596,508|
|Moody's Corporation||(NYSE: MCO)||24,669,778||$0.44||$10,854,702|
|Goldman Sachs||(NYSE: GS)||10,959,519||$0.75||$8,219,639|
|Southwest Airlines||(NYSE: LUV)||47,659,456||$0.125||$5,957,432|
|Store Capital||(NYSE: STOR)||18,621,674||$0.31||$5,772,719|
|Sanofi SA (ADR)||(NYSE: SNY)||3,878,524||$1.253||$4,859,791|
|American Airlines||(NASDAQ: AAL)||46,000,000||$0.10||$4,600,000|
|M&T Bank||(NYSE: MTB)||5,382,040||$0.75||$4,036,530|
|Restaurant Brands International||(NYSE: QSR)||8,438,225||$0.45||$3,797,201|
|Synchrony Financial||(NYSE: SYF)||20,803,000||$0.15||$3,120,450|
Taking a look at some of the older companies on the list reveals an interesting feature they have in common in terms of dividends: more than a few of them raise their dividends steadily and reliably, typically boosting them once every year. Some are even Dividend Aristocrats. Coca-Cola is among this elite group, as are (admittedly much smaller holdings) Walmart and Procter & Gamble.
|Stock||Ticker||#shares owned||Dividend per share||Total payout|
|Visa Inc||(NYSE: V)||10,562,460||$0.21||$2,218,117|
|Costco Wholesale||(NASDAQ: COST)||4,333,363||$0.50||$2,166,682|
|Sirius XM Holdings||(NASDAQ: SIRI)||137,915,729||$0.011||$1,517,073|
|Johnson & Johnson||(NYSE: JNJ)||327,100||$0.84||$274,764|
|Procter & Gamble||(NYSE: PG)||315,400||$0.69||$217,626|
|Graham Holdings||(NYSE: GHC)||107,575||$1.33||$143,075|
|Mondelez International||(NASDAQ: MDLZ)||578,000||$0.22||$127,160|
|United Parcel Service||(NYSE: UPS)||59,400||$0.91||$54,054|
|Verizon Communications||(NYSE: VZ)||928||$0.59||$548|
Warren likes to get paid
So what does this tell us about Buffett and Berkshire, and their relationship to dividends?
Warren hasn't exactly been mum on the subject. He's acknowledged the dichotomy of Berkshire not paying dividends at all in its decades-long history, while collecting buckets of them from the portfolio stocks.
Simply put, he believes Berkshire should reinvest its profits back into its business. These funds can be deployed for capital expenditures in the companies it owns directly, or new acquisitions. Further down the priority ladder, and only under certain conditions, Berkshire will buy back its own shares.
Meanwhile, with a deep and wide portfolio, a rich trove of dividend money rolls into the Berkshire coffers on a steady basis, to be utilized for the above purposes. And the company's cash pile continues to grow ever higher -- it stood at an eye-watering $116 billion at the end of 2017, with $7 billion of that coming in Q4 alone.
So at the end of the day, we can characterize Buffett as a man who simply appreciates steady additions to his cash position. Perhaps, then, he isn't so different from you or me after all.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), Johnson & Johnson, Mastercard, Moody's, Verizon Communications, and Visa. The Motley Fool is short shares of IBM and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends American Express, Costco Wholesale, Graham Holdings, and Synchrony Financial. The Motley Fool has a disclosure policy.