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Warren Buffett's Dividend Portfolio

Warren Buffett’s Berkshire Hathaway outperformed the S&P 500 by 9.8% per year from 1965 through 2020, generating an overall gain of 2,810,526% compared to the market’s total return of 23,454%.

It’s no wonder why investors closely monitor Warren Buffett’s portfolio. He is arguably the greatest investor of all time.

You can download an up-to-date list covering all of the dividend stocks owned by Warren Buffett by clicking here.

While Berkshire Hathaway itself does not pay a dividend because it prefers to reinvest all of its earnings for growth, Warren Buffett has certainly not been shy about owning shares of dividend-paying stocks. 

Over half of Berkshire's holdings pay a dividend, and several of them have yields near 4% or higher. 

A dividend is often the sign of a financially healthy and stable business that is committed to rewarding shareholders. These are some of the qualities Warren Buffett looks for when he invests.

Warren Buffett’s Investment Strategy

Warren Buffett has evolved as an investor since launching his original partnership in 1956. Back then, Warren Buffett’s portfolio was much smaller in size and allowed him to pursue the greatest inefficiencies he could find in the market almost regardless of the stock’s market cap. He focused intensely on finding stocks trading at cheap valuations.

Buffett was not afraid to make a single position account for more than 25% of his portfolio and stated that he would be comfortable investing up to 40% of his net worth in a single security if the probabilities were deemed to be extremely in his favor, limiting risk.

Warren Buffett’s portfolio remains concentrated today, with Apple representing around 40% of Berkshire Hathaway’s portfolio (excluding cash). 

The idea behind running a concentrated portfolio is that there are relatively few excellent businesses and investment opportunities in the market at any given time, and owning too many positions reduces the impact from your few best ideas.

Importantly, Warren Buffett’s investment strategy has always been focused on the concept of staying within one’s circle of competence. Buffett has said that “risk comes from not knowing what you’re doing.”

In other words, never invest in a business or industry that is too hard for you to understand. The reality is, most investment opportunities fall outside of our circle of competence and should be ignored. 

Since the days of his initial partnership, Buffett’s strategy has evolved to concentrate more on buying up wonderful businesses at reasonable prices rather than digging through the bargain bin for “cheap” stocks. He looks for companies that have strong economic moats and numerous opportunities for growth.

When Warren Buffett makes an investment, he has said that his favorite holding period is “forever.” The idea is to buy excellent companies with solid long-term growth prospects and let them compound over the long run.

Not surprisingly, our dividend investment philosophy shares many similarities with Warren Buffett’s. 

By remaining focused on simple, high quality businesses trading at reasonable prices, we can construct a sound dividend portfolio that can deliver safe, growing dividend income for years to come.

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