Warren Buffett's 4 Favorite Dividend Stocks Are Sizzling Picks for 2025

If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors.

Known for his long buy-and-hold strategies and massive portfolio of public and private holdings, he remains one of the world’s preeminent investors. With interest rates poised to move lower, adding Buffett dividend-paying stocks that will rally as bond yields drop makes sense.

Despite Berkshire Hathaway Inc.’s (NYSE: BRK-B) big sales of Apple Inc. (NASDAQ: AAPL) and Bank of America Corp. (NYSE: BAC), Buffett did not sell any of the highest-yielding stocks in his portfolio. Part of the reason may be that while shares of Buffet’s massive investment conglomerate are up 30% this year, the biggest gain since 2021, some of his holdings underperformed and could be poised for a big 2025. All four of the following stocks are rated Buy by the top Wall Street investment banks we cover.

Why do we cover Buffett stocks?

There are few investors with the results and the reputation Buffett has garnered over the past 50 years. While investing has changed over the previous half-century, buying shares of good companies with products and services that are known worldwide while paying dividends will always stay in style. 

Ally Financial

The bank with no buildings posted solid third-quarter earnings and offers a solid 3.2% dividend. Ally Financial Inc. (NYSE: ALLY), a pioneer in the digital financial services industry, provides a diverse range of innovative digital financial products and services to consumer, commercial, and corporate customers, primarily in the United States and Canada.

It operates through four segments:

• Automotive Finance Operations
• Insurance Operations
• Mortgage Finance Operations
• Corporate Finance Operations

The Automotive Finance Operations segment offers:

• Automotive financing services, including retail installment sales contracts
• Loans and operating leases
• Term loans to dealers
• Financing dealer floor plans and other lines of credit to dealers
• Warehouse lines to automotive retailers
• Fleet financing.

It also provides financing services to companies and municipalities to purchase or lease vehicles and vehicle remarketing services.

The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.

The Mortgage Finance Operations segment manages a consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans from third parties and direct-to-consumer mortgage offerings.

The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies and leveraged loans and commercial real estate products to serve companies in the healthcare industry.

The company also offers commercial banking products and services, securities brokerage, and investment advisory services.

Keefe, Bruyette & Woods has an Outperform rating and a huge $56 target price.

Chevron

This integrated giant is safer for investors looking to position themselves in the energy sector and pays a hefty 4.30% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide. It operates in two segments.

The Upstream segment is involved in the following:

• Exploration, development, production, and transportation of crude oil and natural gas
• Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
• Transportation of crude oil through pipelines; and transportation, storage
• Marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum products
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

It also involves cash management, debt financing, insurance operations, real estate, and technology businesses.

Chevron announced in the fall of 2023 that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion. The U.S. Federal Trade Commission (FTC)  approved Chevron’s purchase of Hess earlier this year. Shareholders of Hess had approved the proposed merger with Chevron in May of 2024.

UBS has a Buy rating and a monster $195 target price.

Citigroup

This is a top money center bank, and Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.05% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.

Citigroup offers:

• Consumer banking and credit
• Corporate and investment banking
• Securities brokerage
• Transaction services
• Wealth management services.

Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).

Trading at a reasonable 9.2 times estimated 2025 earnings, this company looks very sensible in a volatile stock market and in a sector that has lagged some earlier in 2024 but looks to be gaining ground.

Wells Fargo has an Overweight rating with a $95 target.

Kraft Heinz

Even in bad times, everybody has to eat, and this company always stands to benefit while paying a tremendous 5.17% dividend. Kraft Heinz Co. (NYSE: KHC) was formed via the merger of H.J. Heinz and Kraft Foods.

The company is a leading global food company with estimated annual revenues of $25 billion from well-known brands such as Kraft, Heinz, Oscar Meyer, and Maxwell House.

Kraft Heinz is North America’s third-largest food and beverage manufacturer. It derives 76% of its revenues from that market and 24% from International.

The company’s additional brands include:

• ABC
• Capri Sun
• Classico
  Jell-O
• Kool-Aid
• Lunchables
• Ore-Ida
• Oscar Mayer
• Philadelphia
• Planters
• Plasmon
• Quero
• Weight Watchers
• Smart Ones
• Velveeta

Citigroup has a Buy rating to go with a $38 target.

Four Ultra-High-Yield Stocks Will Pay a Landslide of Monthly Dividends

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