High-yield dividend stocks have the potential to

  • Offer a plump income stream in both good times and bad times.
  • Provide much-needed diversification to growth-oriented portfolios.
  • Outperform the S&P 500 over the long haul.

Of course, there’s no better place for investors to find solid high-yield stock picks than the portfolio of Berkshire Hathaway CEO Warren Buffett.

So with that in mind, let’s take a look at three stocks in Berkshire’s portfolio with an annual dividend yield of at least 3%.

1. Organon

Organon offices
Chris Upson / Wikimedia Commons

With a solid dividend yield of 3.3%, biosimilars (copies of drugs used to treat diseases) and women’s health drugs specialist Organon leads off our list.

Organon became a part of Berkshire’s portfolio when drug giant Merck spun off the shares in June, but given the company’s competitive advantages and tailwinds in the women’s health space, Organon could easily become a long-term holding for Buffett.

In the most recent quarter, Organon said women’s health and biosimilars revenue increased 19% and 43%, respectively.

“Looking beyond 2021, we remain confident in our ability to organically grow revenue in the low to mid-single digit range, as LOE risk will largely be behind us and Women’s Health and Biosimilars are positioned to deliver double digit growth,” said CEO Kevin Ali.

Organon shares are flat since being spun off and currently trade at a cheapish price-to-earnings ratio of 4.9.

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2. Store Capital

Store Captial on tablet device
STORECapital / Twitter

Next up, we have retail-oriented REIT Store Capital, which boasts a healthy dividend yield of 4.0%.

It’s no secret that retailers were hit hard during the COVID-19 pandemic, but Store’s dividend continues to be supported by healthy cash flows and a stable roster of large corporate tenants (more than 70% of its tenant base generates annual revenue of over $50 million).

In the most recent quarter, the company’s adjusted funds from operations — a key metric in the real estate space — clocked in at a solid $135.6 million.

“Collectively, our strong portfolio performance, origination activity and financial results have enabled us to raise our 2021 AFFO guidance from $1.90 to $1.96 per share to a range of $1.94 to $1.97,” said President and CEO Mary Fedewa.

Store Capital shares trade at a price-to-book of 1.7 versus 4.4 for the S&P 500.

3. The Kraft Heinz Company

Heinz Ketchup
Mike Mozart / Flickr

Rounding out our list is packaged food giant Kraft Heinz Company, which currently offers a tasty dividend yield of 4.4%.

Kraft Heinz’s dividend is backed by massive scale advantages and a portfolio of well-known brands — including Heinz ketchup, Jell-O and Philadelphia cream cheese. And with the top-line continuing to benefit from the trend of consumers eating at home, Kraft Heinz looks well-positioned for the next few years.

In Kraft’s latest quarter, the company topped analyst estimates even amid inflationary pressures as demand for its packaged meals remained strong.

“Our second quarter results serve as a strong indicator that our Kraft Heinz team will not only deliver a stronger 2021 than we initially anticipated, but will come out of the global pandemic much stronger than we entered,” said CEO Miguel Patricio.

Kraft shares have fallen 17% over the past three months, making it an especially delicious-looking value opportunity.

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Cash is king

Man holding Money in hand at Black Background, Man receive a lot Money from Trading, Business Success Concept.
jesterpop / Shutterstock

There you have it: three attractive high-yield dividend stocks sitting in Berkshire Hathaway’s portfolio.

While growth stocks make most of the financial headlines, generating regular income should be a top priority for risk-averse investors.

Of course, you don’t have to limit yourself to the stock market to do that.

For instance, this investing service makes it possible to lock in a steady rental income stream by investing in premium real estate properties — from commercial developments in LA to residential buildings in NYC.

You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to, and you’ll receive regular payouts in the form of quarterly dividend distributions.

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

Brian Pacampara, CFA

Brian Pacampara, CFA

Investing Editor

Brian is an editor for MoneyWise. A long-time stock junkie, his work has appeared in The Motley Fool, Seeking Alpha, and Yahoo Finance. He believes in owning "Forever Stocks" — a rare group of businesses that have paid out dividends for decades. Brian holds the Chartered Financial Analyst (CFA) designation.

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