Warren Buffett of Berkshire Hathaway is recognized as one of the greatest long-term investors of all time. In mid February Berkshire filed its 13F for the fourth quarter of 2012, disclosing many of its long equity positions as of the end of December; since Buffett tends to invest long term the holding company probably still owns most of these stocks. 13Fs can also be used to develop investment strategies; we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year and other techniques are likely possible as well. We went through Berkshire’s most recent 13F looking for stocks Warren Buffett likes which also pay high dividends (check out the full list of stocks Berkshire reported owning). Here are five stocks which Berkshire had over $75 million invested in at the end of December and which currently pay a dividend yield of at least 3%:
The Procter & Gamble Company (NYSE:PG) pays a 3% yield and Berkshire reported a position of almost 53 million shares in the megacap personal products company in its filing. With most of its products being consumer staples, Procter & Gamble’s beta is only 0.3; considering its large market cap it’s therefore a good prospect for income or defensive investors, though sales growth has been low as would be expected. Billionaire Bill Ackman’s Pershing Square was another major Procter & Gamble shareholder, owning nearly 28 million shares at the end of December (see more of Ackman’s long stock picks).
Find three more income stocks Buffett owned:
Berkshire didn’t let concerns about military spending cuts bother it: the holding company maintained its position of 3.9 million shares in General Dynamics Corporation (NYSE:GD). The stock price is down 6% in the last year as the defense contractor (best known for manufacturing military vehicles) may be harmed by reductions in federal spending. The dividend yield is about 3%, though this is lower than can be found at some other aerospace and defense companies. Billionaire Ken Griffin’s Citadel Investment Group was buying General Dynamics last quarter (check out more stocks Griffin was buying).
Sanofi SA (NYSE:SNY) was another high yield stock in Buffett’s portfolio. The $125 billion market cap drug manufacturer pays a dividend yield of over 3.5%. According to the 13F, Buffett had 4.1 million shares of Sanofi in his portfolio at the beginning of January. The sell-side is very bullish on the stock, judging from the fact that the forward P/E is only 6. Fisher Asset Management cut its stake by 6% to a little over 13 million shares between October and December (find Fisher’s favorite stocks).
Berkshire Hathaway reported owning 1.7 million shares of Kraft Foods Group Inc (NYSE:KRFT), a primarily American provider of Kraft products which resulted from the breakup of that company. Kraft Foods has declared a quarterly dividend of 50 cents per share, which makes for an annual yield of a little over 4% at current prices. The breakup may also enable Kraft’s managers to better focus on operations, while earlier they would have had to concern themselves with the needs of the larger business. Clint Carlson’s Carlson Capital disclosed ownership of 1.9 million shares of Kraft Foods in its own 13F filing.
Disclosure: I own no shares of any stocks mentioned in this article.
