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How Much Dividend Income Will Warren Buffett's Berkshire Hathaway Generate in 2019?

Wall Street is cluttered with large financial investment banks, wealth management companies, mutual funds, and hedge funds. But in the end, none can hold a candle to the simplistic yet effective value investing style that Warren Buffett has brought to the table over the past 60-plus years.

In a little more than six decades, Warren Buffett has transformed his roughly $10,000 seed investment into approximately $81 billion. That's a compound annual return rate of around 28% since the mid-1950s, whereas the stock market has returned an average of 7% per year, inclusive of dividend reinvestment and when factoring in inflation, over the long run.

Berkshire Hathaway CEO Warren Buffett answering questions during his company's annual meeting.
Berkshire Hathaway CEO Warren Buffett answering questions during his company's annual meeting.

Warren Buffett answering questions during Berkshire Hathaway's annual shareholder meeting. Image source: The Motley Fool via Flickr.

How much will Buffett's company pocket in dividends this year?

You might think the Oracle of Omaha has some magic trick he's used to create wealth for himself and his company, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), over time, but it's really no magic at all. Buffett's buy-and-hold ethos and his ability to identify inexpensive businesses with long-term staying power have done the trick and pushed Berkshire's investment portfolio to a value of $186.5 billion as of Jan. 13, 2019.

Of course, it's not just stock appreciation that interests Buffett. Dividend income does as well.

Companies that pay a dividend have historically outperformed companies that don't offer a regular payout over the long run. That's because dividend-paying companies often have time-tested business models, and they wouldn't be sharing a percentage of their profits with their shareholders if they didn't foresee continued growth and profitability. In 2019, Berkshire Hathaway stands to collect a pretty penny in dividend income.

How much, you ask? Let's take a closer look.

A businessman counting a stack of crisp cash bills in his hands.
A businessman counting a stack of crisp cash bills in his hands.

Image source: Getty Images.

The non-dividend payers in Berkshire's portfolio

According to Berkshire Hathaway's 13-F filing with the Securities and Exchange Commission on Nov. 14, 2018 -- a filing required of all firms with more than $100 million in assets under management -- it held shares in 47 securities, some of which had multiple voting classes available. The first step is to weed out which of these 47 securities will not pay a regular dividend in 2019. Those investments are:

  • Axalta Coating Systems

  • Charter Communications

  • DaVita

  • Liberty Global Class A

  • Liberty Global Class C

  • Liberty Latin America Class A

  • Liberty Latin America Class C

  • Liberty SiriusXM Group Series A

  • Liberty SiriusXM Group Series C

  • StoneCo

  • Teva Pharmaceutical Industries

  • United Continental Holdings

  • USG Corp.

  • Verisign

These 14 companies don't provide any dividend income to Buffett. But in another context, it means that 33 of his holdings do.

Buffett is raking in big bucks with these dividend stocks

Understandably, a lot can change over the course of the year. Berkshire's holdings are unlikely to remain static, and the 33 dividend-paying companies could also see their payouts increase or, in rarer cases, decrease. But if things were to remain as they are as of the 13-F filing on Nov. 14, here's how much Berkshire Hathaway would pocket in dividend income from each of his holdings.

Company

Shares Owned

Annual Dividend

Estimated Income

American Airlines Group

43,700,000

$0.40

$17,480,000

Apple

252,478,779

$2.92

$737,238,035

American Express

151,610,700

$1.56

$236,512,692

Bank of America (NYSE: BAC)

877,248,600

$0.60

$526,349,160

Bank of NY Mellon

77,849,476

$1.12

$87,191,413

Costco Wholesale

4,333,363

$2.28

$9,880,068

Delta Air Lines

65,535,000

$1.40

$91,749,000

General Motors

52,461,411

$1.52

$79,741,345

Goldman Sachs

18,353,635

$3.20

$58,731,632

JPMorgan Chase

35,664,767

$3.20

$114,127,254

Johnson & Johnson

327,100

$3.60

$1,177,560

Kraft Heinz (NASDAQ: KHC)

325,634,818

$2.50

$814,087,045

Coca-Cola

400,000,000

$1.56

$624,000,000

Southwest Airlines

56,047,339

$0.64

$35,870,297

Mastercard

4,934,756

$1.32

$6,513,878

Moody's Corp.

24,669,778

$1.76

$43,418,809

Mondelez International

578,000

$1.04

$601,120

M&T Bank

5,382,040

$4.00

$21,528,160

Oracle

41,404,791

$0.76

$31,467,641

Procter & Gamble

315,400

$2.87

$905,198

PNC Financial Services

6,087,319

$3.80

$23,131,812

Phillips 66

15,433,024

$3.20

$49,385,677

Restaurant Brands Int'l

8,438,225

$1.80

$15,188,805

Sirius XM Holdings

137,915,729

$0.05

$6,895,786

Store Capital

18,621,674

$1.32

$24,580,610

Synchrony Financial

20,803,000

$0.84

$17,474,520

Torchmark

6,353,727

$0.64

$4,066,385

Travelers Cos.

3,543,688

$3.08

$10,914,559

United Parcel Service

59,400

$3.64

$216,216

U.S. Bancorp

124,923,092

$1.48

$184,886,176

Visa

10,562,460

$1.00

$10,562,460

Verizon

928

$2.41

$2,236

Wells Fargo

442,361,700

$1.72

$760,862,124

Table and income calculations by author. Data source: Berkshire Hathaway 13-F, Yahoo! Finance.

Add those 33 columns up, and Buffett's Berkshire Hathaway is in line to receive $4,646,737,673 in dividend payments in 2019.

Mind you, most of these companies raise their quarterly payout each year, meaning Berkshire may have an outside chance at $5 billion in annual dividend income by perhaps 2020, in my view.

What stands out?

Aside from simply loving boring businesses that make money, there are a few things that stick out from the data above.

The Oscar Mayer Wienermobile parked on a highway.
The Oscar Mayer Wienermobile parked on a highway.

Oscar Mayer is one of many brands under the Kraft Heinz umbrella. Image source: Kraft Heinz.

First of all, you might be shocked to learn that Apple, despite being Buffett's largest holding by market value, isn't Berkshire's top income stock. In fact, it actually slots in third, behind the nearly $761 million Wells Fargo will bring in and the $814 million Kraft Heinz will generate. Kraft Heinz, the company behind the namesake Kraft foods and Heinz condiments, is a smart hold in practically any economic environment. Consumers' food-buying habits tend to be relatively predictable, and brand-name companies like Kraft Heinz often have a loyal customer base that's willing to accept higher prices when needed. That's a formula for consistent cash flow, and it's a big reason why Kraft Heinz offers such a robust payout.

You'll also likely notice that Buffett has a love affair with big banks -- at least in the dividend department. Between Wells Fargo, Bank of America, U.S. Bancorp, JPMorgan Chase, American Express, and Goldman Sachs (and ignoring his smaller bank holdings), Buffett's company will bring in almost $1.9 billion in dividends in 2019. That's assuming these payouts don't increase even more. A rising rate environment is usually a very good thing for banks, as variable-rate loans reset higher and higher credit card interest rates allow for improved net interest income. Bank of America is particularly sensitive to interest rate increases and has seen its net interest income expand faster than that of any of its peers as rates have risen over the past three years.

Long story short, if dividends have been a major contributing factor to Warren Buffett's success, they can be so for you, too.

More From The Motley Fool

Sean Williams owns shares of Bank of America and Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), Mastercard, and Southwest Airlines. The Motley Fool owns shares of Delta Air Lines, Johnson & Johnson, Moody's, Oracle, and Visa and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short January 2019 $140 calls on Johnson & Johnson, and long January 2020 $30 calls on Oracle. The Motley Fool recommends Costco Wholesale and Verizon Communications. The Motley Fool has a disclosure policy.

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