3 Warren Buffett Dividend Stocks That Offer Passive Income for a Lifetime

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

Long-time investors and Buffett mavens are familiar with his quote, “His favorite holding for an S&P 500 stock is forever.” So, it is not surprising to report that for all of the success and stature Berkshire Hathaway has in the investment world, just seven top companies make up almost 75% of the funds’ total holdings.

While much more concentrated than most portfolio managers would ever consider, the strategy has worked for Berkshire Hathaway investors for years and likely will in the future. We decided to screen the current holdings, looking for companies that pay the highest dividends and have the potential to trade higher over the coming years. Three stocks have the potential to offer passive income investors a lifetime of reliable dividends.

Why do we cover Warren Buffett stocks?

With a 15-year track record of covering Buffett and Berkshire Hathaway at 24/7 Wall St., we must keep our readers updated on the latest news from the financial powerhouse. There are few investors with the results and the reputation Buffett has garnered over the past 50 years, and while investing has changed over the previous half-century, buying good companies with products and services that are known worldwide while paying dividends will always stay in style.

Ally Financial

With no buildings, the bank posted solid third-quarter earnings and offers a solid 3.35% dividend. Ally Financial Inc. (NYSE: ALLY), a pioneer in the digital financial services industry, offers 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 funds 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, as well as 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.

Chevron

This integrated giant is a safer option for investors looking to position themselves in the energy sector and pays a 4.30% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

The company 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 last fall 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.

Kraft Heinz

Even in bad times, everybody has to eat, and this company always stands to benefit while paying a tremendous 4.45% 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

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