Goal: $3,000 in passive income Method: Invest $16,000 in these 3 Warren Buffett dividend stocks and wait 5 years

The Motley Fool » All Articles » Goal: $3,000 in Passive Income – Method: Invest $16,000 in These 3 Warren Buffett Dividend Stocks and Wait 5 Years

in 3 sentences

  • Verizon has a tremendous dividend yield that has increased for 15 years in a row.
  • Chevron is in excellent financial shape, having paid dividends for 36 consecutive years.
  • US Bancorp is regularly ranked among the best in the banking industry.

During times of volatility, investors may look for stocks with high dividend yields that can generate stable passive income over time. There aren’t many who know more about dividend stocks than Warren Buffett. about your company Berkshire Hathaway Buffett has invested in more than a few dividend stocks that have helped Berkshire outperform over the years.

Three stocks that are giving Buffett some nice dividend yields are the telecom giant Verizon Communications (WKN: 868402), the largest energy producer gallons (WKN: 852552) and the big bank US Bank (WKN: 917523). A $6,000 investment in Verizon with a dividend yield of about 4.8%, $5,000 in Chevron with a dividend yield of about 3.25%, and $5,000 in US Bancorp with a dividend yield of about 3.4% % would generate about five years Generate $3,100 in passive income . Not that bad. Let’s take a look at each of these three actions.

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Buffett bought Verizon in late 2020 in the midst of the pandemic, at a time when it was selling more than it was buying. Verizon not only offers a high dividend yield, but it’s also a classic Buffett stock, trading at less than 10x earnings. Verizon also appears to have some momentum, as the company had a strong quarter, with earnings and revenue beating expectations. Forecasts for this year were also above analysts’ expectations.

Verizon is making good progress with its 5G wireless initiative, and within that initiative there are some exciting new business areas where the company appears to be taking the lead. For example, Network as a Service (NaaS), a digital subscription that allows users to sync all their electronic devices, from an iPhone to a self-driving car. Verizon has now increased its dividend for 15 years in a row, making it a very strong dividend stock.

2. Chevrons

Chevron is one of the best performing stocks in Berkshire’s portfolio, having gained more than 40% so far in 2022. The catalyst this year has been the Russian invasion of Ukraine, which has sent oil prices significantly soaring. Since the US and many other countries have banned oil and gas imports from Russia due to the war, and Russia is one of the largest gas exporters, this has made US energy companies very valuable. Chevron is currently trading at an all-time high.

The company is also in good financial shape and has a track record of growing free cash flow even as oil prices plummet. Chevron also plans to significantly increase its share buybacks and recently raised its free cash flow guidance through 2026. The company has increased its dividend annually for 36 years in a row. Given this year’s strong performance, it’s certainly fair for investors to wonder if a setback isn’t on the horizon at some point. But Chevron is in a very strong financial position and is a great dividend stock.

3. US Bank

Completing the group is US Bancorp, one of the largest banks in the US with more than $564 billion in total assets. US Bancorp has survived the Buffett and Berkshire sell-off of banks during the pandemic and appears to be Buffett’s favorite US regional bank. US Bancorp is a premier commercial bank serving both small businesses and larger corporations through its unique payments business that sets it apart from its competitors. In the coming years, US Bancorp plans to further unify and integrate its payments and commercial banking products.

Since 2010, US Bancorp has consistently delivered high annual returns on equity above 14%. That’s a good indication of how much money the company has made from shareholders’ capital. US Bancorp is a consistent dividend payer and has consistently increased its dividend since 2010. The bank is regularly among the best performers in the industry.

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Bram Berkowitz does not own any of the shares listed. The Motley Fool owns stock and recommends Berkshire Hathaway and recommends Verizon Communications. This article was published on April 9, 2022 on Fool.com and has been translated for our German readers.

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