U.S. Bancorp (USB)
As the parent company of U.S. Bank, U.S. Bancorp is one of the largest banking institutions in the country.
Last summer, the bank increased its quarterly cash dividend from 42 cents to 46 cents per share – that’s $1.84 per share annualized. At the current share price, the company yields a generous 3.6%.
Berkshire owns 144,046,330 shares of U.S. Bancorp, meaning it’s earning over $265 million in annual dividend income just from this one holding.
It also helps that banks are solidly positioned for the rising interest rate environment: they lend money out at higher interest rates than they borrow, pocketing the difference. As interest rates increase, the spread earned by banks widens.
To tame spiking inflation, the Fed raised its benchmark interest rates by 50 basis points on May 4, marking the first half-point increase since 2000. Similar moves are expected to occur at the Fed’s upcoming meetings in June and July.
A discussion of Buffett’s dividend stocks would not be complete without his beloved Coca-Cola.
Buffett started hoarding shares of the beverage giant in the late ’80s. Today, Berkshire owns a whopping 400,000,000 shares of the company.
Coca-Cola went public more than 100 years ago. This February, the board approved the company’s 60th consecutive annual dividend increase, raising the annual payout to $1.76 per share.
And that means Berkshire now collects $704 million in dividends a year from Coca-Cola.
It’s not hard to see why the payout has been so reliable: The company’s iconic products are sold in more than 200 countries and territories, and even in a recession, a simple can of Coke is still affordable to most people.
The stock currently yields 2.8%.
Energy stocks have turned out to be big winners amid the oil price boom, and Buffett expects the fun to continue.
The legendary investor significantly increased his stake in Chevron in Q1. Owning 159,178,117 shares, Berkshire’s Chevron position has a market value of over $28 billion, making it the third-largest holding in the portfolio.
As an oil and gas supermajor, Chevron’s business is firing on all cylinders. For Q1, the company reported earnings of $6.3 billion, which more than quadrupled the $1.4 billion in the same period last year. Revenue totaled $54.4 billion for the quarter, up 70% year-over-year.
In January, Chevron’s board approved a 6% increase to the quarterly dividend rate to $1.42 per share.
Holding 159,178,117 shares of Chevron, Berkshire now collects a staggering $904 million a year in dividends from the oil producer.
Chevron shares are already up 50% in 2022 and now offer an annual dividend yield of 3.2%.
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.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.