Verizon Communications (VZ)

Verizon was a new addition to Buffett’s portfolio in 2021. And it’s a pretty chunky stake: At the end of Q3, Berkshire owned nearly 159 million shares of the telecom giant.

The company is a household name.

Its 4G LTE network covers 99% of the U.S. population. And while we’re still in the early stages of 5G adoption, more than 230 million people are already covered by Verizon’s 5G network.

Massive recurring revenue means Verizon is well-positioned to pay regular dividends. Right now, Verizon has a quarterly dividend rate of $0.64 per share, translating to an annual yield of 4.8%.

Of course, Verizon isn’t the highest yielder in the space. AT&T, for instance, yields an even juicier 7.6%.

Cell phone bills are on the rise. And what’s the old saying? If you can’t beat them, join them.

If you’re not happy with what you pay Verizon or AT&T every month, collecting dividends from these companies might be a small way to get even.

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Johnson & Johnson (JNJ)

When it comes to delivering recession-proof returns, few companies have done a better job than healthcare giant Johnson & Johnson.

The stock has been trending up for decades and for good reason. Johnson & Johnson’s business grows consistently through thick and thin.

Over the past 20 years, Johnson & Johnson’s adjusted EPS has increased at a steady pace of 8% annually.

And that means shareholders can look forward to higher dividends every year.

Johnson & Johnson announced its 59th consecutive annual dividend increase last April. The stock currently yields 2.5% — nearly twice as much as the average yield of the S&P 500.

The company boasts consumer staples found in any U.S. home: skin care products like Neutrogena, pain medications Tylenol and Motrin, Listerine, Band-Aids, and more.

In fact, Johnson & Johnson recently announced plans to spin off its consumer health segment into a separate company in order to unlock value. Once the split is complete, investors will be given shares in both companies and, in turn, receive dividend payments from both stocks.

That makes J&J a particularly timely and attractive inflation play. As of the most recent quarter, Berkshire owned about 327,000 shares in the company.

Store Capital (STOR)

Being a landlord is one of the oldest ways to earn a passive income.

If you want to collect rental income without worrying about the headaches that come with tenants, consider using real estate investment trusts — companies that own and manage income-producing real estate.

Buffett has a sizable stake in a REIT called Store Capital.

Store has a large portfolio consisting of investments in over 2,700 properties diversified across 49 states.

The company collects rent on these properties and passes it along to shareholders in the form of dividends. The stock is offering a handsome yield of 4.6% at the current price.

Store’s tenants tend to be leading national and regional companies with large revenue bases. Notably, one of the company’s top 10 tenants is movie theater giant AMC Entertainment Holdings, whose shares are always followed these days.

And because Store’s portfolio is leased to 529 tenants coming from 118 different industries, the REIT can maintain its dividend even if one tenant or industry enters a downturn.

As of Berkshire's latest portfolio disclosures, it owned roughly 24.4 million shares in Store.

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Make passive income your priority

Even if you’re not bullish on these dividend-paying stocks, generating regular income should be a top priority for risk-averse investors.

And you don’t have to limit yourself to the stock market to do that.

For instance, some popular investing services let you lock in a steady rental income stream by investing in premium commercial real estate properties — from R&D campuses in San Jose to industrial e-commerce warehouses in Baltimore.

You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to.

And the best part? You'll receive regular passive income in the form of cash distributions without any headaches or hassles.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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